Fuel prices jump in Poland as final government crisis measures end

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Notes from Poland is run by a small editorial team and is published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

Retail fuel prices rose in Poland on Wednesday after the expiry of the last government measures introduced to shield consumers from an energy price shock triggered by the conflict in the Middle East.

Fuel price monitoring service E-petrol said prices increased following the restoration of the standard 23% VAT rate from 1 July, citing media reports from filling stations at various locations.

According to those reports, prices of both petrol and diesel rose by around 0.80-0.86 zloty (€0.19-€0.20) per litre, or 13-14%, at some stations.

The Dziennik.pl news website reported petrol prices between 6.79 and 6.82 zloty per litre and diesel prices ranging from 6.97 to 7.05 zloty per litre. The broadcaster Polsat News and news site Business Insider Polska also reported similar increases.

Urszula Cieślak, an analyst at fuel market monitoring service Reflux, said the return of the 23% VAT rate from 8% was large enough for pump prices to rise by more than 0.50 zloty per litre, although Reflux expected the increase to settle at 0.30-0.50 zloty per litre.

Finance minister Andrzej Domański confirmed those expectations in an interview with Polsat News. “This is probably an average that we can assume,” he said.

Poland introduced the measures after global fuel prices surged earlier this year as the war in Iran disrupted shipping through the Strait of Hormuz, a key route for global oil and liquefied natural gas supplies.

The package included a cut in VAT on fuels to 8% from 23%, a reduction in excise duty to the European Union minimum and a daily retail fuel price cap.

Oil prices began easing as the United States and Iran moved closer to a preliminary deal to end the conflict and reopen the waterway, which they have since signed.

This led Poland to gradually phase out the measures, which Domański said had always been intended to be temporary. Part of the package, the lower excise duty, expired on 15 June, while the reduced VAT rate and price cap ended on 30 June, sending retail fuel prices higher.

The finance ministry has estimated the package cost the state budget around 1.6 billion zloty per month. The Polish Press Agency (PAP) on Wednesday quoted the ministry as saying that the measures had cost 4.7 billion zloty in total.

To help offset the cost to the state budget, the government earlier this month approved draft legislation introducing a one-off windfall tax on fuel companies that benefited from higher prices during the energy crisis.

The proposed levy, which still requires parliamentary approval and President Karol Nawrocki’s signature, is expected to raise around 4 billion zloty. State energy giant Orlen is expected to account for about 60% of the tax base.

Notes from Poland is run by a small editorial team and published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

Main image credit: Engin Akyurt / Pexels

Olivier Sorgho

Olivier Sorgho is senior editor at Notes from Poland, covering politics, business and society. He previously worked for Reuters.