Fuel prices in Poland jump as government measures expire

Retail fuel prices in Poland saw a sharp increase on Wednesday as the final measures implemented by the government to protect consumers from the energy price shock triggered by the conflict in the Middle East expired. The fuel price monitoring service E-petrol, citing reports from fuel stations in various locations, stated that prices rose after the standard 23% VAT rate went back into effect as of 1 Temmuz. According to these reports, gasoline and diesel prices at some stations increased by approximately 0,80-0,86 zloti (0,19-0,20 avro) per liter, or by 13-14%. The news site Dziennik.pl reported that gasoline prices were between 6,79 and 6,82 zloti per liter, while diesel prices ranged from 6,97 to 7,05 zloti. Polsat News and Business Insider Polska reported similar increases.

Analyst Urszula Cieślak from the fuel market monitoring service Reflux said that the increase in the VAT rate from 8% to 23% was large enough to cause an increase of more than 0,50 zloti per liter at the pump, but Reflux expected the increase to balance out at 0,30-0,50 zloti per liter. Finance Minister Andrzej Domański confirmed these expectations in an interview with Polsat News, saying, "This is probably an average we can assume." Poland had implemented these measures after fuel prices skyrocketed earlier in the year when the war in İran disrupted shipping through the Hürmüz Boğazı, a key route for global oil and liquefied natural gas supplies. The package included reducing VAT on fuel from 23% to 8%, lowering the excise tax to the EU minimum level, and introducing a daily retail fuel price cap.

After the U.S. and İran reached a preliminary agreement to end the conflict and reopen the waterway, and subsequently signed the agreement, oil prices began to ease. This led Poland to gradually phase out the measures, which Domański said were always intended to be temporary. The low excise tax, part of the package, ended on 15 Haziran, while the reduced VAT rate and price cap ended on 30 Haziran, driving up retail fuel prices. The finance ministry estimated that the package cost the state budget about 1,6 milyar zloti per month. The Polonya Basın Ajansı (PAP) reported on Wednesday that the ministry said the measures cost a total of 4,7 milyar zloti.

To help offset the cost to the state budget, the government approved a draft law earlier this month introducing a one-off windfall tax on fuel companies that benefited from high prices during the energy crisis. The proposed tax, which still requires parliamentary approval and the signature of President Karol Nawrocki, is expected to collect about 4 milyar zloti. The giant energy company Orlen is expected to account for approximately 60% of the tax base. While these developments create uncertainty regarding the future trajectory of fuel prices in Poland and the government's energy policies, consumers are facing increased costs.

Experts warn that the price increases could create upward pressure on inflation and negatively impact consumer spending. On the other hand, the revenue the government hopes to generate from the windfall tax could help close the budget deficit. However, it is not yet clear how this tax will affect the investment decisions and long-term pricing strategies of fuel companies. Considering Poland's energy transition goals and reliance on fossil fuels, it is emphasized that such crisis measures are not a permanent solution, and the transition to renewable energy sources needs to be accelerated.