The first in Europe: Slovakia imposes fuel rationing due to the surge in oil prices

Prime Minister Robert Pico announced on Wednesday that each car owner will be able to refuel for a maximum of 400 euros. It will be prohibited to bring and carry jerrycans for filling fuel ahead of time, with the exception of an amount of ten liters, which will be considered part of this ceiling amount. Foreign residents who own vehicles with foreign license plates will be forced to pay higher prices at gas stations than locals. The sale of oil and its products to companies outside the country will be prohibited in any case. The price for foreigners will be calculated according to the average of the prices in Poland, Austria and the Czech Republic, Slovakia’s neighbors.

In recent days, Slovakia has become a destination for “fuel tourism”, after the government imposed a ceiling price on gasoline in order to make it easier for the population. The situation in the country is particularly serious because it relies – like Hungary – on fuel procurement through the Druzhba pipeline from Russia. The oil pipeline has been stopped in Ukraine, and both countries accuse Kiev of trying to disrupt the supply to deduct revenue from Russia. The Prime Minister told the public that the latest steps are necessary “to prevent price increases”.

In fact, a price ceiling for gasoline has been imposed across Europe in recent days. The logic behind this approach is that the shock is only temporary and that fiscal measures will help. But as the war drags on and energy prices remain high, the chance of a general increase in the price level and another wave of inflation is increasing. The price of a barrel of Brent jumped to $108 in today’s trading, almost double its level before the war with Iran and the de facto closure of the Strait of Hormuz.

The crisis is already here

In Hungary, which is facing crucial elections in about a month, the incumbent Prime Minister Viktor Orban, who is fighting against the polls, decided to place an upper limit on the price of gasoline and diesel at the gas stations. The maximum price will be 595 forints (1.52 euros) per liter of gasoline, and 615 forints (1.57 euros) per liter of diesel. The rest will be subsidized by the government from its budget. Only cars with Hungarian license plates or Hungarian businesses will be able to benefit from these prices. These prices are already in effect at gas stations.

About two-thirds of the residents support this step, according to a survey that took place in the country. “The goal is to neutralize uncertainty and continue business as usual,” wrote a Hungarian economic expert in the local media. Orban is trying to paint the opposition that threatens his rule as supporting Ukraine, and therefore opposes the purchase of oil from Russia, and blame the price increases on it. Outside of Europe, South Korea decided to adopt a similar model: for the first time in three decades, a ceiling price was set for the wholesale sale of fuel at stations, at 1.01 euros.

In Germany, which boasts of the highest energy prices in Europe, it is about completely different levels. Gasoline prices this morning (Thursday) in Europe’s largest economy stand at 2.2 euros per liter and diesel prices at 2.5 euros per liter. In an attempt to combat the rapid price increases, the government recently introduced a lightning-quick law that allows prices to be updated at gas stations only once a day, at noon. This is a method adopted from neighboring Austria. But in the meantime, Austria has even made the system worse – allowing prices to rise only three times a week.

The German government has announced that it will impose a fine of 100,000 euros on any gas station that violates this regulation or coordinates prices with other stations in order to “maximize” the price it charges. More significant measures, such as a discount on “green” levies levied on fossil fuels or VAT relief on them, are considered at this stage only theoretically.

In Germany, they are mainly afraid of the price increase mechanism that will begin to gain momentum with the continuation of energy price increases. “First is the increase in energy prices and fertilizer prices (a by-product of the energy industry), which will have a contagious effect on the increase in transportation and food prices – and finally this will be reflected in prices in supermarkets,” wrote a German economist in an analysis by ING Bank regarding the current situation.

In Greece, it was decided to include 61 products in a “base basket” that will be protected from speculative price increases for at least six months. The government will determine the allowed price increase rate according to the average prices in 2025 and the profit of the supermarkets on these products. It was also decided that gas stations will not be able to charge more than 12 euro cents per liter above the price at which they purchased the fuel. Only on remote islands in the country will it be possible to charge up to 17 cents per liter. In fact, it is an economic mechanism that places an upper barrier not on the price, but on the profits of food and fuel companies, in an attempt to prevent them from taking advantage of the situation and unjustifiably raising prices. The advantage of the mechanism is that it does not need to be updated according to market prices.

In Spain, the social-democratic government is considering “pulling out of the closet” the many measures it took in the last crisis, after the war in Ukraine. These included a ban on layoffs due to energy costs, as well as a ban on evictions from rented apartments and grants to residents for heating or increased electricity expenses.