Fuel prices surge again in Latvia as coalition revives windfall tax debate

Fuel prices in Latvia have become a hot topic both on social media and in political circles as costs at filling stations keep climbing day by day. Users on the platform Threads expressed frustration, noting that a car is a necessity rather than a luxury for many people, and that rising fuel costs ripple through to food, services and delivery prices. Some commenters pointed out that fuel is even more expensive in other EU countries such as the Netherlands and Greece, while others suggested alternatives like driving to Poland for cheaper fuel or switching to electric vehicles.

Political response

The Union of Greens and Farmers (ZZS) has decided to bring back, at next week's coalition meeting, a proposal previously drafted by the Ministry of Economics to introduce a solidarity (windfall) tax on fuel retailers. ZZS parliamentary group leader Harijs Rokpelnis said earlier concerns that excise tax cuts weren't being passed on fairly to consumers had proven justified, and urged coalition partners to reach a political decision by Monday. Economy Minister Viktors Valainis had earlier said the government should return to the windfall payment idea, since rising diesel prices are increasing costs across transport, manufacturing and agriculture. The government approved such a measure in April, but after objections from business organizations the bill failed to gain support in parliament.

Why prices are rising

The Ministry of Finance explains that consumer price growth accelerated in August, driven mainly by higher diesel prices. This followed escalating tensions in the Persian Gulf and a rise in Brent crude oil prices to $91.4 per barrel in August, climbing above $95 by early September. In August, the average diesel price in Latvia was €1.883 per liter, up 24.5% year-on-year, while 95-octane petrol averaged €1.787 per liter, up 18.7%. The ministry warns that fuel's contribution to inflation is likely to grow further in September if the oil market situation does not change.