Oil companies raise their share of fuel prices by 16 krónur per litre

Oil companies’ share of the price of each litre of fuel has risen by 16 krónur since late August, according to calculations by the Icelandic Confederation of Labour (ASÍ), reported by mbl.is.

ASÍ said recent fuel price increases were driven not only by tax changes and higher purchase prices, but also by increased markups from oil companies. The calculations, included in the organisation’s analysis of new inflation figures, are based on the average of the lowest prices.

Fuel price rises were the biggest contributor to October’s increase in the consumer price index. They accounted for 0.27 percentage points of the index’s 0.44 per cent rise, more than half of the total.

Diesel prices rose 11.2 per cent month on month in October, while petrol prices increased by 8 per cent. In September, diesel rose 18.1 per cent and petrol 16.1 per cent.

ASÍ cited three main reasons for the increases: the reversal of a temporary cut in value-added tax on fuel, higher global prices and a larger share of the price going to oil companies. The tax cut took effect on 1 May, moving fuel into the lower tax bracket. Its reversal was quickly reflected in prices in early September, when all oil companies raised prices during the first week of the month.

Global petrol prices rose by almost 10 per cent from late August to early October, although some of that increase was reversed in October, ASÍ said.

ASÍ has previously examined fuel price trends in connection with the introduction of a kilometre-based charge and the abolition of excise duties on fuel at the turn of the year. The organisation said the abolition had resulted in lower fuel prices, but also noted that oil companies’ share of the price per litre had increased in recent years and was high by historical standards.