The government took its first measures last week, which have no fiscal burden, while keeping in the drawer for now support measures like fuel pass, market pass and others, which will be activated if the turmoil in international oil and natural gas markets persists for a long time. The economic team, knowing very well the behavior of the market, rushed to bring measures against profiteering, as the government staff characterized them, which consist of the reintroduction of the maximum profit margin measure that was in effect during the last energy and inflationary crisis. It should be noted that the new profit margin cap will be in effect, according to the Presidential Decree (PD), on fuels and basic living products until June 30, 2026. By then, the possibility of extending the measures will be examined depending on the course this second energy crisis takes.
The measures concern the two basic fuel products, unleaded gasoline 95 octane and diesel, and approximately 60 categories of basic supermarket goods. Regarding fuel measures, a profit margin cap of up to 17 euro cents was set from refinery to consumer. Of these, 5 cents concern wholesale, i.e., from the petroleum company to the gas station, and 12 cents concern retail, i.e., from the gas station to the consumer.
On the other hand, for food and basic household items (supermarket products), the maximum profit margin limit was set at the average profit margin that applied for 2025 for each product on the list included in the relevant regulation. This is undoubtedly a very difficult exercise that the new independent Market Supervision and Consumer Protection Authority (AЕAPK) must carry out.
Indeed, the government gave the new Authority a powerful weapon, the imposition of penalties up to 5 million euros, depending on the size of the company and the type of violation. As the relevant PD states, in case of relapse into the same violation, the fine can be doubled and reach up to 10 million euros. With this move, the government wanted to prevent, apart from the very likely wave of price increases in basic goods, also criticism about the absence of policy that leaves consumers prey to large business interests. “We prioritize addressing profiteering, acting preventively and making it clear that the government will not be at all tolerant on this issue,” commented Deputy Prime Minister Kostis Hatzidakis during the announcement of the measures.
Also, government officials, responding to criticism about excluding large refineries from the grip of the new PD, argued that refineries are controlled through their subsidiary petroleum trading companies.
Natural gas: The government awaits European Commission decisions
Additionally, they mentioned that there may be other refinery control tools, such as extraordinary profit taxation. In this direction, they remind that in the previous crisis, the government twice imposed extraordinary profit taxation on the country’s two refineries.
The great speed with which the government reacted has to do with two basic factors. First, how quickly the price of gasoline and diesel “caught fire” and, second, the bad data that ELSTAT showed on last February’s inflation. Gasoline, according to data from the Ministry of Development (fuelprices.gr), increased by 13 euro cents within 11 days and diesel by 30 euro cents.
On the other hand, ELSTAT data announced last week showed general inflation at 2.7% and food inflation at 5.2%. And all this with oil barrel being below $70 and not at $90-100, where it has been moving in recent days.
Therefore, although the government’s measures are currently exhausted in controlling market prices, which, moreover, has no fiscal cost, there is a second package of measures with fiscal cost. These are the well-known vouchers (fuel pass, market pass, etc.), which for now remain “frozen”. As government sources mentioned, there are some margins – small ones, but they exist. They did not give more details, however, as they wait to see how the energy crisis will develop. A crucial factor for implementing the measures is the price of Brent oil, which interests Greece, exceeding, for example, $100 per barrel for one month – and not sporadically, within one trading day.
Additionally, the government awaits decisions from the European Commission, which recently, especially for the energy goods market, did not hesitate to speak even about state aid measures and investigating natural gas price subsidization. This position was made by EU President Ursula von der Leyen from the European Parliament podium. It is certain that the Greek government will feel more secure if it brings measures to support vulnerable households under an EU measures umbrella. In such a case, as happened during the pandemic, it will not “crumple” its fiscal profile either.
*Published in Parapolitika
