‘It’s a crock’: Italians outraged at 25-cent fuel discount

Italy cut fuel duties - and therefore the price at the pump - on Wednesday in response to soaring costs. But drivers and petrol station operators are far from impressed with the move.

'It's a crock': Italians outraged at 25-cent fuel discount
A picture taken in Rome earlier this month shows a board displaying the fuel price at a gas station, as refueling has become more expansive as a result of the war in Ukraine. (Photo by ALBERTO Pizzoli / AFP)

Italy has cut fuel duty in a move aimed at bringing the cost back down below two euros a litre, after prices soared to record highs in March due to the war in Ukraine.

But motorists and gas station operators were not satisfied with the cut, which amounts to a 25-cent discount for one month only.

This is a reduction in excise duty (a tax on the production and consumption of goods) on petrol and diesel. After adding VAT at 22 percent, the total discount to the consumer is 30.5 cents per litre.

The reduction came as part of a package of measures approved by the government on Friday, worth 4.4 billion euros, which Prime Minister Mario Draghi said would be “financed not by the public purse but by companies in the energy sector”.

READ ALSO: ‘The impact is zero’: Energy giants not worried by Italy’s tax on profits

But the government’s response was not welcomed at the pumps on Wednesday, with may left unimpressed by both the size of the discount and the length of the validity.

“I feel a bit fooled. In 30 days it will be over and everything will be as it was before, so what has changed?” Italian citizen Marco Morbidelli from Pesaro told newspaper Il Resto del Carlino.

“It’s a crock,” he said.

Petrol station operatives are also dissatisfied with the plan, arguing that it doesn’t help them run their business.

Alessandro Bailetti, a manager of a petrol station, said, “The state has lowered the cost of excise duties, but we have paid for our fuel by paying them too. Who will give us back these 30 cents that they have taken away? They say there will be a contribution – we hope so, even if we still don’t know when and how.”

Even with the cut to fuel cost, some Italians say that prices at the pump are still very high.

Motorist Daniele Luzi told the paper, “The state should not allow these increases and, above all, should examine its conscience about everything it makes us pay, because it is inappropriate.”

READ ALSO: How to save money on your fuel in Italy

The measures come after Italian industry and consumer groups urged the government to slash VAT and excise duty to keep the country moving after businesses, including Italy’s hauliers, said they couldn’t afford to operate.

Last week, Italian consumer watchdog Codacons revealed that the price of petrol had risen by 39 percent in a year in Italy, and diesel prices have risen by 51 percent.

Codacons said taxation was at 55.3 percent on every litre of petrol and 51.8 percent on diesel.

According to industry group Confindustria, the surge in fuel prices means the Italian state is “taking higher tax revenues thanks to the VAT paid on fuel prices.”

In the last week alone, the extra revenue gained [from VAT] is up by approximately 45 million euros compared to in the second week of February, the group said.

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How long will it take Italy to wean itself off Russian gas?

Italy's government has repeatedly said it plans to end its dependence on Russia for gas supplies following the invasion of Ukraine. But as the timeline keeps changing, when and how could this happen?

How long will it take Italy to wean itself off Russian gas?

Italy is heavily dependent on Russian gas, but has been seeking new sources since Moscow’s invasion of Ukraine as part of an effort to end this reliance in the coming years.

But it remains unclear whether Italy can really end its dependence on Russia for its gas supply – or when this might be feasible.

READ ALSO: What does Italy’s Algerian gas deal mean for energy supplies?

The government has been seeking new sources since Moscow’s invasion of Ukraine, including with a recent deal to boost supplies from Algeria.

Prime Minister Mario Draghi said last week the country could be independent of Russian gas by the second half of 2024 – the latest in a series of changing estimates.

“Government estimates indicate that we can make ourselves independent from Russian gas in the second half of 2024,” Draghi told the Senate, while adding that the “first effects” of this plan would be felt by the end of this year.

He said his government was also seeking to boost its production of renewable energy, including by “destroying bureaucratic barriers” to investment, saying it was the “only way” to free Italy from having to import fossil fuels.

Explained: Why and how Italy will pay for Russian gas in rubles

In April, Italy‘s Ecological Transition Minister Roberto Cingolani estimated the country would no longer need Russian gas within 18 months, following an earlier prediction that it could take until 2025.

Italy is one of Europe’s biggest users and importers of natural gas, importing 90 percent of its gas supply with 45 percent of that coming from Russia – up from 27 percent ten years ago.

Italy now imports 29 billion cubic metres of Russian gas a year, which Cingolani said in March “must be replaced” – but he didn’t specify with what.

Analysts have said there are “a lot of questions” about how helpful Italy’s gas deal with Algeria will be.

Despite its vast natural gas reserves, Algeria is already exporting at close to full capacity.

Draghi repeated his strong support for EU sanctions on Moscow last week, including a proposed ban on imports of Russian oil, although this is currently being blocked by Hungary.

“We must continue to keep up the pressure on Russia through sanctions, because we must bring Moscow to the negotiating table,” he said.

But for now, Italian energy giant Eni says it plans to pay for Russian gas supplies in rubles, meeting a demand from Vladimir Putin.

It was not immediately clear whether the plan would fall foul of European Union sanctions, although Eni said it was “not incompatible”.

The company said its decision to open the accounts was “taken in compliance with the current international sanctions framework” and that Italian authorities had been informed.