Europe is heading into a very difficult final quarter of the year, with the two ongoing wars — in Ukraine and the Middle East — once again driving oil and natural gas prices sharply higher. At the Greek Prime Minister’s office, officials are watching international developments with growing concern — particularly how they translate at the pump: Unleaded gasoline has surpassed €2.10 per liter in Attica and €2.20 on many islands, while fears are mounting that in four weeks’ time, when heating oil distribution begins, prices could reach as high as €2.00 per liter.
Heating oil: Government examines comprehensive support package
Against this backdrop, the Greek government is pursuing three avenues of support for citizens and businesses facing rising fuel and energy costs: the state budget, oil refineries — which are being called upon to contribute to the new support package — and the European Union, from which Athens is demanding bold and decisive action.
On the first front, calculations by the Ministry of Finance point toward a maximum of €200 million in additional spending during the final quarter of 2026. Priority is being given to heating oil, based on the rationale that citizens have no readily available alternative — let alone a more affordable way to heat their homes when temperatures plunge in November or December. The existing diesel subsidy (€0.10 per liter) will also continue, as it helps keep costs in check across the supply chain and, by extension, on the final prices of transported goods.
On Monday, the Ministries of Finance and Environment will announce the heating oil support measures, with funding drawn from both the government and the refineries. The goal, as stated by Prime Minister Kyriakos Mitsotakis, is for heating oil to open the season significantly below €1.75 per liter — the price at which it closed last April — despite the challenging international environment.
Equal cost-sharing
The subsidy will likely be split equally between the state budget and the refineries — potentially around €0.15 per liter each — so that if the market price reaches €2.00, the intervention would bring it down to approximately €1.70. In addition, a across-the-board increase to the heating allowance is planned, and an expansion of the eligibility criteria is under consideration. Last year, the income thresholds were set at €16,000 annually for single individuals and €24,000 for married couples, with additional allowances for children. It is worth noting that the heating allowance covers not only those who use oil, but also households that rely on natural gas or firewood. Targeted interventions will also continue, with increased funding for mountainous regions, which experience significantly lower temperatures in winter.
Another measure in the government’s arsenal for what promises to be a very difficult winter is a cap on profit margins. This mechanism has been applied before and is being planned along the same lines, though the details have not yet been finalized: Petroleum trading companies that supply retail fuel stations will be prohibited from charging more than €0.05 per liter above their refinery procurement price for 95-octane unleaded gasoline and diesel.
In turn, gas stations themselves will be prohibited from applying a markup of more than €0.12 per liter above the price charged by trading companies when selling to consumers. Through this mechanism — or a similar price cap — an upper limit on profit margins will be established, aimed at preventing any instances of price gouging.
At the same time, the Greek government is pressing Brussels to take measures to curb rising energy costs, and to allow member states to reduce excise duty on fuels without it counting against so-called “expenditure ceilings.” Should such an emergency escape clause be adopted at the EU level, the government has indicated it would use it to temporarily cut fuel excise duty. As one senior economic adviser put it characteristically: “Some fiscal rules need to be broken so that we can free up resources.”
Originally published in MoneyPro by Parapolitika
