Portuguese motorists can expect a slight reprieve at the pump next week, with diesel prices projected to fall marginally while gasoline remains steady, according to forecasts released Friday by the Portuguese Automobile Club (ACP). The predictions come amid ongoing scrutiny of government fuel tax policies, implemented in response to the energy crisis spurred by the war in Ukraine, and increasing pressure from brussels to phase out these subsidies.Portugal’s Finance Minister has indicated the European Commission has not yet set a firm deadline for ending fuel tax discounts, but a gradual reversal is anticipated.
Fuel prices in Portugal are expected to show a mixed trend at the start of next week, with gasoline prices remaining stable while diesel is set for a slight decrease, according to the Portuguese Automobile Club (ACP). This comes as global energy markets continue to experience fluctuations influenced by geopolitical factors and economic conditions.
The ACP forecasts a decrease of half a cent for diesel, while gasoline prices are predicted to hold steady. “A new week, new changes in fuel prices, with sector forecasts pointing to a decrease in the price of diesel and the maintenance of the gasoline price,” the organization stated.
Specifically, the average price of simple diesel is expected to fall to 1.532 euros per liter, while the average price of 95 octane unleaded gasoline is projected to remain at 1.658 euros per liter, should the predictions hold true.
These forecasts are based on the assumption that the government’s current extraordinary tax reduction measures remain in place to mitigate price increases. These measures include offsetting additional VAT revenue and reducing the Imposto sobre Produtos Petrolíferos (ISP), a tax on petroleum products. However, the government has already begun to reverse the ISP reduction, with further reversals anticipated when fuel prices fall too low.
End of ISP Discount? Brussels Hasn’t Set a Date
Portugal’s Finance Minister, Joaquim Miranda Sarmento, has indicated that the European Commission has not yet imposed a specific deadline for ending the discount on the Imposto sobre Produtos Petrolíferos e Energéticos (ISP). The government intends to phase out the discount gradually to avoid a sharp increase in fuel prices.
“The Commission, for now, has not imposed a date, no calendar, but has continued to emphasize that Portugal, among other countries – I believe around 10 more – must reverse these discounts on fuel taxation,” Miranda Sarmento said.
Speaking to Portuguese journalists in Brussels following a meeting of EU finance ministers, the minister explained that “the end of the ISP discount, the reversal of the ISP discount, will be as gradual as possible.” “Therefore, we cannot anticipate either the gradualism or its end,” he added.
Following criticism from Brussels, the government will now begin to withdraw the ISP benefit gradually, starting in 2023. The discounts were initially introduced in 2022 and 2023 in response to the energy crisis linked to the war in Ukraine and high inflation.
The government did not include any provisions for eliminating these discounts in the 2026 State Budget proposal and has signaled that the process will be gradual. The Finance Ministry has assured stakeholders that it is working on a solution to prevent fuel price increases, planning to remove the benefit during periods of falling prices.
This move is in response to recommendations from the European Commission to reduce these discounts, as they were exceptional measures designed to mitigate the impact of rising fuel prices. Eliminating the current ISP discount and updating the carbon tax would generate additional revenue for the state coffers of 1.132 billion euros, according to the Public Finance Council.
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