Latvia suspends mandatory biofuel blend to slow price hikes

The government on Tuesday, June 14, decided to waive the requirement for the mandatory addition of biofuels to gasoline and diesel from July 1 to the end of 2023 in order to slow price rises.

Fuel merchants will be able to choose whether to add the blend of biofuels or not.

The amendments to the rules are intended to reduce retail fuel prices and thus inflation.

Accoring to the Ministry of Economics, the retail price of fuel is composed of five components. The highest costs in the final price come from the price of fuel, which also includes the cost of bio-blend. The second most important item is excise duty, followed by value-added tax. To a lesser extent, the price of fuel is affected by the costs of maintenance of the service station, and a negligible proportion of the final fuel price consists of the costs of storage of oil safety reserves.

According to the Ministry of Economics, the price of fuel is expected to decrease by around 10 cents with the bio-fuel requirement removed.

"The rise in fuel prices observed in recent months has a negative impact on both households and business operators, particularly transport operators. [..] We have now agreed that removing the biofuel requirement for the period until the end of 2023 would be the quickest and most effective solution," commented Economics Minister Ilze Indriksone (National Alliance).

 

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