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EU states use strategies to combat price rise in gasoline pump: Report

As the crisis in Ukraine increases global fuel prices, governments in European Union (EU) member states are looking for ways to reduce the economic impact their citizens are having on gasoline pumps.

The price of gasoline per liter has exceeded 2 euros ($ 2.1 US) in 19 eurozone countries, according to media reports. Supply issues related to the conflict between Russia and Ukraine are the main factors driving up prices.

At the start of the conflict in February, the average gasoline price briefly increased by 2 euros per liter, but the latest increase is part of a continuing rise in prices amid supply shortages and shortages in the summer travel months.

Another big factor is the euro-dollar exchange rate. International trade in oil and gasoline is priced in US dollars, which means that the euro’s recent weakness against the US currency has increased the price in euro terms.

A year ago, the average price of a liter of gasoline in the eurozone was 1.30 euros and earlier this year, the price was about 1.55 euros per liter. That means prices are up more than 50 percent from last year and nearly 30 percent from the beginning of 2022.

European countries that have vowed to stop petroleum imports from Russia by the end of this year have adopted different strategies to deal with the problem. Prior to the Ukraine crisis, Russia supplied more than a quarter of the EU’s petroleum needs.

In Hungary, which does not use the euro, the government has set a price limit on gasoline, though the discount does not apply when buyers have a non-Hungarian license plate on their car.

Germany, meanwhile, has discounted monthly passes on public transport to make that option more attractive.

France, Italy, Germany and Bulgaria (the country’s currency is tied to the euro), have dramatically reduced fuel taxes as a way to artificially reduce costs at the petrol pump, though some economists have worried about such policies. The basis can have a negative impact on governments’ finances.

Croatia and Slovenia are some of the countries that have set maximum fuel prices on some kind of freeze or gasoline station.

Gasoline prices in Slovenia jumped to a record high on Tuesday after the government’s May deadline for limiting retail prices on Monday, but the government decided to limit prices on highways.

High fuel prices are a major contributor to inflation in the eurozone. In May, consumer prices in the eurozone rose an average of 8.1 percent, up from 7.4 percent a month ago.

Since the creation of the euro currency in 1999, May’s rate is the highest on record.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is self-generated from the syndicated feed.)

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