There is a smell of burning, that is, extraordinary (albeit, until proven otherwise, legitimate) profits by those who refine and distribute fuels in Italy, in these weeks of exceptional increases in crude oil and its refined derivatives.
The latest clue – which strengthens well-founded suspicions – came from reading yesterday’s Sole 24 Ore which reports that «Between March 12 and 25, the Guardia di Finanza carried out 1,089 interventions, contesting 795 violations. In fact, this means a 73% rate of non-compliant behaviors found out of the total inspections. Going further into detail, there are 159 irregularities detected for failure to display or discrepancies between the prices charged and those indicated, and 636 omissions related to communication obligations to the Ministry of Enterprises and Made in Italy’s “Osservaprezzi carburanti” portal.»
An activity that is grounded in the further crackdown ordered by decree law 33/2026: «According to the rule in force since March 19, if the Price Guarantor detects sudden and abnormal increases in pump prices, they are required to provide the Guardia di Finanza with a detailed list of the operators and oil companies involved. On this basis, the Corps is called to carry out the necessary accounting checks to verify anomalies in costs and daily purchase prices, tracing the entire distribution chain up to the cost of crude oil and refined products borne by the holders of oil authorizations.»
As we had already pointed out a few days ago, something is not working in the transmission system in favor of the final consumer of the excise tax cut ordered by the government, which practically no one has noticed. Because in the meantime the industrial price of fuels (diesel in particular) has increased to the point of exceeding the benefit of lower taxes.
Let’s start with the data from the Easter week, which has so far been the most difficult for Italian motorists and truckers for whom, despite the government’s generous effort with the excise tax cut, it has only mitigated the impact of rising fuel prices. As expected, the weekly average price survey published Tuesday by the Ministry of the Environment recorded a price for diesel and gasoline of 2.09 and 1.76 €/liter respectively, further rising by 6 and 3 cents compared to the previous week. For diesel, a level close to that of mid-March 2022, just before the long sequence of excise tax reductions decided by the Draghi government.
Compared to the week before the government’s intervention (Wednesday, March 19), diesel increased by 6 cents, despite taxes (excise and VAT) decreasing by 19 cents, simply because the industrial price increased by as much as 25 cents. For gasoline, instead, the pump price still managed to fall because the industrial price, increasing by 15 cents, only partially eroded the positive effect of the tax cut (21 cents) and the consumer benefited from a 6-cent reduction.
But compared to the week before the outbreak of hostilities in the Persian Gulf, the situation is much worse: diesel increased by 37 cents (+50 cents industrial price and -13 cents taxes) and gasoline by 9 (+27 cents industrial price and -18 cents taxes).
However, these data make Italy a white crow (in a positive sense) in the European panorama because only Spain and Poland accompany us on this path. Limiting ourselves to the largest economies of the EU, Germany and France have not intervened at all, resulting in diesel prices soaring above 2.30 €/liter in these countries, on average 20 cents more than Italy.
In France, interventions have been limited to “concessional” loans (3.80%) up to 50,000 euros for small and medium enterprises in the agriculture, transport, and fishing sectors.
Fortunately, the EU Energy Commissioner Dan Jørgensen, echoed precisely on Monday by the Financial Times, who called for “coordination and caution” in interventions on fuel prices, so as not to turn an energy price crisis into a public finance crisis, has so far remained unheard. As well as the words of another Commissioner, Valdis Dombrovskis, who requested “consistent and short-term” measures, always fearing “serious fiscal implications.”
These indications clash with a reality that sees a high heterogeneity of the impact of this crisis on member states. And different situations require different solutions, not coherence and coordination.
For example, Qatar supplies only 4% of the EU’s gas imports, but accounts for one-third of Italy’s LNG imports. In France, the relatively high share of energy produced by nuclear power is well known; in Spain, thanks to the high share of renewables, during many hours of the day energy production from less efficient fossil sources does not enter the calculation of the energy price.
In any case, Italy and Spain have used two different paths to cut the tax burden on fuels. The first cut excise taxes, the second mainly VAT (from 21% to 10%) and also excise taxes; although the result was almost equivalent, there are strong indications that Madrid’s choice was more effective from the point of view of transmitting the benefit to the final consumer.
In fact, comparing the weekly survey of March 16 (the week before the reduction interventions) with that of March 30 (when the reductions were fully implemented), it is observed that the average weekly pump price of diesel in Spain decreased by 6 cents, while in Italy it remained unchanged, despite taxes decreasing by 20 cents in both countries.
This is because the industrial price in Italy increased by as much as 20 cents and in Spain by 15 cents, where the industrial price was already higher compared to Italy. The increase recorded in Italy is also higher than that of France and Germany. Since the industrial price of diesel is determined by the price of oil and the gross refining margin, we can hypothesize that something did not work perfectly in the transmission (the so-called pass-through) of the excise tax cut from refiners/distributors to the final consumer. If the price of oil has increased everywhere for everyone, why has the industrial price of diesel in Italy increased more than elsewhere?
Since there are studies showing that something remains “caught” in the distributor’s margin, it is not to be overlooked the hypothesis that distributors/refiners – for whom the excise tax is a cost – have pocketed the benefit of the lower cost without lowering prices to the same extent, thus increasing their gross refining margin. A stickiness that is not found when the VAT rate is reduced which, not being a cost for the refiner/distributor, is immediately and fully passed downstream to the final consumer, regardless of stocks, which instead play a role when excise taxes are increased or reduced.
Moreover, when oil price increases and, consequently, the industrial price follow one another, the excise tax cut is soon offset by the increase in full-rate VAT on the higher tax base. In short, with one hand the State gives (cutting excise taxes) and with the other takes (collecting the higher VAT) and the consumer benefits only partially.
Nor, at the moment, does the sudden drop in crude oil prices following the precarious ceasefire in place since Wednesday seem to have brought any relief.
But now, with the extension of the excise tax cut to May 1, the “budget folds” available to Minister Giancarlo Giorgetti have run out and further interventions will require the formal approval of a budget deviation. Brussels will have to accept it, because the choice is between a mild or severe recession, where the damage of the recessionary effect of rising prices will be compounded by the insult of the absence of the normal anti-cyclical effect exercised by the public budget in these cases.
