Babiš Refuses to Cap Fuel Margins, Calls Rising Petrol Prices a Global Problem

Czech Prime Minister Andrej Babiš has said his government sees no reason to cap margins at petrol stations, arguing they are already minimal. "The margins overseen by the Ministry of Finance amount to no more than three crowns," Babiš said, adding that authorities currently have no room left for further regulation.

The prime minister described the problem of expensive fuel as global in nature. He pointed to a shortage of refining capacity linked to the US military campaign against Iran, as well as the war in Ukraine, which has systematically destroyed Russian oil refineries — Russia has now been waging its aggression against Ukraine for five years.

Refiners' Margins at Record Highs

Refinery margins are currently at record levels. Last week, the gap between crude oil prices and wholesale diesel prices in Europe topped 100 dollars per barrel for the first time. In the United States, margins crossed that threshold back in August.

"At the European level, we need to ask whether the refineries themselves aren't overdoing it," Babiš said. He plans to raise the issue for the first time this Thursday at a meeting of Visegrad Group prime ministers.

Fuel Prices Climbing in Czechia Too

Fuel prices are also rising domestically. According to data from CCS, a litre of diesel cost an average of 47.21 crowns on Sunday — the highest price since early April. Petrol averaged 43.62 crowns per litre.

According to Boris Tomčak, an investment manager at Finlord, a quick improvement is unlikely. "The blockade of the Strait of Hormuz continues, preventing refineries near the Persian Gulf from exporting their products. On top of that, a ban has been imposed on fuel exports from Russia, since refineries there have been damaged and the country is short about a quarter of its production capacity," he explained.

Tomčak believes the market will eventually find its own balance between supply and demand. In his view, the government could help drivers by cutting fuel excise duty or releasing strategic reserves. "In the long run, the best solution is to develop other energy sources," the analyst added.

Babiš Rules Out Cutting Excise Duty

In a video address on social media on Sunday, Babiš ruled out any cut to the fuel excise tax. He said such a measure would significantly hit the state budget, which has posted deficits of hundreds of billions of crowns in recent years.

Finance Minister Alena Schillerová previously noted that the spring excise-duty relief, which accompanied the government's earlier fuel price regulation, cost the budget roughly one billion crowns in lost revenue per month.

Source: novinky.cz