The cost of petrol and diesel at the pumps in Malta has remained cheaper than the European average, despite a 5c increase announced last month.

Over the last 12 months, the cost of petrol here has been 7c2 below the European average and in the case of diesel the discrepancy was even more pronounced: 12c7 less per litre.

This trend emerged from an analysis which Times of Malta carried out on the fluctuations of fuel prices in Europe, based on the weekly oil bulletin published by the European Commission.

The exercise was carried out in the wake of the debate stirred by last week’s announcement that from the start of this month, petrol and diesel would go up in price by 5c. This revision meant that prices were raised by 10c in one year.

On Monday, local union UĦM - Voice of the Workers called for an urgent meeting between social partners to discuss the increase in prices. The Malta Council for Economic and Social Development ought to convene to see how rising costs were affecting working families, the union said. 

It echoed General Workers Union calls for the government to compensate workers for the rise in pump prices. 

The increase in fuel prices came just a few days after dairy producer Benna said it would be bumping up milk prices by 10c a litre.

How are fuel prices set?

In the rest of Europe, prices at the pumps fluctuate every week in line with international oil prices. In Malta, the cost is kept locked for longer periods in line with the government’s policy of prioritising price stability through hedging agreements.

Under this model, State fuel company Enemed buys fuel consignments several months in advance at a fixed price. However, ever since this policy was introduced in 2013, the government has been criticised for taking a gamble.

On one hand the policy offers protection against a sudden spike in fuel prices but in the opposite scenario (a drop in oil prices), the policy would backfire as consumers would not benefit from cheaper fuel. In August last year, Enemed announced a 5c increase in both petrol and diesel. The price of petrol at the pumps had risen to €1.31 while that of diesel to €1.23 per litre.

How does Malta compare to the rest of Europe?

Despite this rise, the cost of petrol in Malta has since only exceeded the European average at the turn of the year, until mid-February.

During this seven-week period it was up to 3c higher than the European average.

However, this unfavourable period for Maltese motorists was more than compensated throughout the rest of the year as petrol dipped significantly below the European average – up to 13c lower per litre in October, May and June.

Over the entire 12-month period the difference in the price of petrol was of 7c2 in favour of Maltese consumers.

In the case of diesel, the price at the pumps never once exceeded the European average in the last 12 months. The biggest discrepancy was registered last November, when diesel in Malta was up to 20c cheaper.

Last Wednesday, Enemed announced another 5c increase in both petrol and diesel, which are now being sold at €1.41 and €1.28 respectively.

However, prices in Malta are still within the middle bracket.

While petrol is the cheapest in Bulgaria at €1.11, it is the costliest in the Netherlands at €1.67.

In the case of diesel, the cheapest is to be found in Luxembourg and Bulgaria, at €1.11, while Sweden has the most expensive diesel at €1.49.

As expected, the second 5c increase in the space of a year has prompted compensation calls from unions and the Opposition. The government pointed out that petrol was still 3c below the EU average and 5c cheaper in the case of diesel.

The Energy Ministry justified the rise on the grounds that the price of oil had increased from €47 to €57 a barrel since the start of the year.

Yet, as Opposition leader Adrian Delia pointed out, when in January 2011 the Labour Party, now in government, had taken to the streets in protest at rising fuel prices, the international price of oil was double and hovering above €100.

Fuel prices back then were still cheaper than at present, with petrol at €1.31 per litre and diesel at €1.21 per litre.

Fuel prices Aug. 2018-Aug. 2019

Source: Weekly Oil Bulletin