The Council of Ministers approves the third royal decree in response to the war in Iran: a direct discount of 20 cents per litre of petrol and diesel, reduced VAT on electricity, and caps on gas and butane until December 31.
The Government approved a new package of measures on Tuesday in the Council of Ministers to mitigate the effects of the war in the Middle East, which includes the extension of direct discounts on fuels, the reduction of VAT on electricity bills, and limits on the price of gas and butane cylinders. According to rtve.es, the measures will be in effect until December 31.
The discount per litre of diesel will remain at 20 cents in October, the same amount as in September, while the discount for petrol will also rise to 20 cents, compared to the five cents that were applied this month. This was detailed by the First Vice President and Minister of Economy, Carlos Cuerpo, at the press conference following the Council of Ministers.
Cuerpo justified the extension due to the “significant deterioration” of the energy crisis, with Brent crude oil above 100 dollars and natural gas exceeding 70 euros per megawatt/hour in the Dutch market, which is a reference in Europe.
The price of diesel surged by 30% in August compared to the same month last year, and petrol prices rose by almost 17%, according to the INE. On the same Tuesday, the agency published that general inflation climbed in September to 4.9%, the highest figure since February 2023.
The royal decree also limits the increase in gas prices to 15% in the regulated or last resort tariff (TUR), and sets that the price of a butane cylinder cannot exceed 19.55 euros. The Minister of Ecological Transition, Sara Aagesen, compared this plan to the one implemented during the crisis caused by the war in Ukraine, after the European Commission requested countries to reduce consumption, for example by limiting temperatures in public buildings and turning off street lighting.
“The Government maintains the social shield to protect households and the most exposed sectors,” Cuerpo stated during his address.
Agricultural organizations ASAJA, COAG, and UPA had threatened mobilisations if the aid was not extended, while the Alliance for the Competitiveness of the Spanish Industry demanded that it be strengthened in light of an additional cost estimated at 7.4 billion euros until the end of the year. The unions UGT and CCOO called for intervention in fuel prices, and Fenadismer requested Cuerpo to intervene if the aid format remained unchanged.
This is the third royal decree approved by the Executive since March to address the consequences of the war in Iran, which has kept the Strait of Hormuz closed. The previous package replaced the VAT reduction with direct discounts, a formula that Brussels viewed more favourably.
The measures come into effect this October and will apply until December 31. Consumers will benefit from the 20-cent discount per litre on petrol and diesel at service stations, while the price of a butane cylinder will not exceed 19.55 euros.
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