remember, half is taxes

remember, half is taxes


Going to the gas station scares drivers more and more. It doesn’t matter how healthy your checking account is, the price of gasoline and diesel is breathtaking and going to refuel is worse than an armed robbery. One of the most frequent doubts among consumers is why the price of fuel does not vary in the same proportion as the price of Brent crude.

It is indisputable that we live in difficult times with the war in Ukraine. These weeks the price of Brent crude has reached maximum peaks of almost 140 dollars per barrel. Yes, the raw material is really expensive. However, the reality is that the price of gasoline or diesel/diesel in Spain It is not directly related to the price of a barrel of oil..

remember, half is taxes

Annually, the Government collects approximately 21,500 million euros from taxes on fuels.

Filling the tank has become more expensive in a year around 25%. The fuels contain a very high percentage of taxes of all kinds. Next, thanks to the Spanish Association of Petroleum Product Operators (AOP), we are going to break down the components of the price to understand what factors influence it.

What is the price of gasoline and diesel made up of?

Basically we have three main parts in the retail price (RRP) of the fuel:

  1. The General State Tax.
  2. Special State Tax.
  3. Autonomous Sectionwhich is basically the same dog, with a different collar.

remember, half is taxes

Base fuel price

The base price of fuel depends on various aspects. One is the international price of gasoline and diesel in the reference wholesale markets (Mediterranean and Northern Europe in our case). The euro/dollar exchange rate is also a significant factor. This cost represents approximately 33% of the PVP in gasoline and 39% in diesel A.

Costs such as production, distribution and marketing hardly vary. We are talking about the costs of the service stations (personnel, maintenance, etc.), the cost of transporting the fuel to the gas station… The margins of the wholesaler and the retailer are also included. This is around 1.5% approximately.

remember, half is taxes

There are also variations in the base price due to the maintenance of strategic reserves, the contribution to the National Fund for Energy Efficiency… The gross distribution margin of gasoline supposes 17% of the RRP. In the diesel round the fifteen%. This is the difference between the PAI and the international reference price.

Taxes on the price of gasoline and diesel

Different taxes are applied to the base price and that is where the real ‘stick’ hits us. Let’s see them:

  • The VAT of 21%. Curiously, it is applied to the fuel price plus the rest of the taxes, not to the base price. This would be the most logical. In this way, the collection is greater because it is as if we were paying VAT on taxes. It represents approximately 18% of the total price.
  • Overall Type: It is a fixed price per litre. We can refer to 32% in the case of gasoline and 28% in diesel with respect to the total price of a liter at a gas station.
  • Special type: represents a fixed amount per litre. It can be updated each year in the General State Budget Law. 58% of said collection is ceded to the Autonomous Communities.
  • Autonomous Tranche of the Hydrocarbons Tax: varied between 0 and 48 cents per liter, but harmonization was carried out. The resources obtained by it go entirely to the autonomous communities.

State tax rates of the hydrocarbon tax 2021

General Type (€) Special type (€)
Leaded Gasoline 433.79 72 euros / 1,000 liters
98 Unleaded Gasoline 431.92 72 euros / 1,000 liters
Other unleaded gasoline 400.69 72 euros / 1,000 liters
General use diesel 307 72 euros / 1,000 liters
Diesel as fuel 78.71 18 euros / 1,000 liters

In summary

A simple look at the data is enough to realize that the price of fuel that you see at the gas station pump is made up of almost 50% for taxes. The remaining percentage is made up of the Price Before Taxes (PAI). In other words, the gasoline you are paying for almost two euros could be paid for less than one euro if some taxes were lowered.

Yes, things are bad in Europe, but don’t be fooled.

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