The ongoing pandemic and the conflict between Russia and Ukraine have led to soaring energy prices across Europe. In response, the Spanish government implemented a fuel discount policy effective from April 1 to June 30, mandating a 20-cent reduction per liter of gasoline and diesel. Of this discount, 15 cents are to be reimbursed by the government, and 5 cents by oil companies.
While consumers welcomed the relief at the pump, gas station owners are feeling the pinch. The crux of their frustration lies in the government’s reimbursement plan, which bases compensation on 2021 sales figures—a period marked by reduced travel due to COVID-19 restrictions. As domestic travel rebounds, particularly highlighted by a surge during the Easter holidays, fuel sales have increased substantially. However, the reimbursements lag behind current sale volumes, causing a financial strain on station owners.
Moreover, with a gross profit margin of just 10 cents per liter, gas stations are required to advance the 20-cent discount to customers. Failure to offer this discount risks losing clientele to competitors who do. According to the Spanish Confederation of Service Station Entrepreneurs (CEEES), this untenable situation has led to the temporary closure of over 350 stations since the policy’s inception, tripling the number of closures in April alone. The CEEES warns that between 3,000 and 4,000 stations face the threat of permanent shutdown.
Nacho Rabadan Rodriguez, CEO of CEEES, expressed deep concern over the policy’s impact in an interview. “The current reimbursement framework doesn’t reflect the reality of our increased sales and puts undue financial pressure on gas station owners,” he stated. Alicia Orgaz, who owns a gas station in La Guardia near Madrid, echoed these sentiments. “Advancing the discounts without timely reimbursement is unsustainable for small businesses like ours,” she lamented.
This development in Spain serves as a cautionary tale for other nations grappling with energy price spikes. It highlights the delicate balance governments must maintain when intervening in markets—providing consumer relief without overburdening small business owners. For Asian countries monitoring global economic trends, Spain’s experience underscores the importance of crafting policies that consider the operational realities of all stakeholders involved.
Reference(s):
Why are Spanish gas stations planning to sue the government?
cgtn.com
