The Government is preparing to activate the mobile excise duty mechanism to contain the increase in fuel prices. According to estimates, the measure could translate into a cut of around 4-5 cents per liter on petrol and diesel, with the aim of slowing down the increases recorded in recent weeks.
The intervention should come with a decree in the Council of Ministers, while the price of oil remains high against the backdrop of new international instability linked to tensions in the Middle East.
But how much will this cut really impact motorists’ pockets? And how does the mechanism that allows the State to temporarily reduce excise duties work?
Because petrol and diesel are increasing
In recent months the price of fuel has started to rise again, thanks to the increase in oil prices on international markets. The Brentthe main reference for crude oil, has returned above 90 dollars a barrel, well above the forecasts contained in Italian public finance documents which estimated a maximum value of around 66 dollars.
This surge is certainly also linked to geopolitical tensions and the crisis in the Middle East, which involves various international players and is generating fears on global energy markets. The direct effect is reflected in prices at the pump: since the beginning of the crisis, increases have reached, in some cases, up to around 35 cents per liter for diesel.
How much fuel prices could drop
The possible intervention on excise duties should lead to a limited but immediate drop in prices. According to energy sector experts, the reduction could be:
However, this is an intervention that will not completely cover the increases recorded in recent months, but it could help contain the increase in prices.
The objective is above all to prevent diesel from permanently exceeding 2 euros per liter in the short term and petrol from rising above 1.8 euros per liter as a national average.
How mobile excise duties work
The mobile excise duty mechanism is nothing new: it was introduced in 2008 and updated in 2023. The principle is relatively simple: when the price of oil increases significantly, the State collects more VAT on fuel. This fiscal surplus is called extra VAT revenue. Since VAT (22%) is applied to the entire price of fuel – including excise duties – when the price of petrol increases, the revenue for the State automatically increases as well.
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The system therefore provides that:
- compare the average price of fuel with that expected in the public finance documents
- if oil steadily exceeds that level
- the State can use part of the extra VAT revenue to temporarily reduce excise duties
In other words, some of the extra revenue generated by the price increase would be returned to consumers in the form of reduced fuel taxes.
In Italy, the final price of petrol and diesel is mainly affected by:
Overall, taxes amount to around 50-60% of the price at the pump, making the cost of fuel particularly sensitive to fiscal choices.
The Government’s decision
The possibility of activating mobile excise duties was confirmed by Prime Minister Giorgia Meloni, who explained that the Government is evaluating the use of this tool to mitigate the effects of the energy crisis on citizens. The decree should be signed by the Ministry of Economy, in agreement with the Ministry of the Environment and Energy Security.
There was also a rare political convergence on the topic: several opposition forces had in fact asked in recent days for an intervention on excise duties to contain the increases.
