Latvia’s government is being urged to prepare potential support measures as fuel prices continue to climb, after Economics Minister Viktors Valainis warned that growing volatility in global energy markets could drive prices even higher.
According to the Ministry of Economics, Valainis has sent a letter to the Cabinet of Ministers calling for early preparations to ensure the government is ready to respond if fuel prices continue to rise.
The minister said the fuel market has shifted from relatively stable to increasingly volatile, as sharp increases in global crude oil and refined petroleum prices, coupled with ongoing geopolitical uncertainty, have renewed upward pressure on fuel costs.
Valainis is urging the government to begin identifying available funding sources and preparing potential support mechanisms before the situation deteriorates further.
The ministry noted that between the 21st of July and the the 27th of July,
the price of Brent crude oil rose by 14.5%, while ICE Low Sulphur Gasoil prices increased by 17.1%.
Although none of the legal thresholds that would automatically trigger support measures have yet been reached, Valainis said this week’s sharp increase in fuel prices clearly demonstrates that the situation is becoming more serious.
“In my view, our responsibility is to act preventively rather than wait until a crisis has already arrived,” the minister said, adding that the previously approved extension of the reduced diesel excise duty is currently helping to cushion the impact of rising prices.
Valainis warned that designing support measures during an emergency takes significantly longer than preparing them in advance, while delayed action could create considerable political, economic and social pressure at a time when both households and businesses are already facing rapidly rising costs.
The Ministry of Economics said it will continue to monitor fuel prices and developments in global energy markets
and, if necessary, submit concrete proposals to the government to ensure a timely and effective response.
Following the Cabinet meeting on the 21st of July, Valainis said the government had already outlined several possible response scenarios should market conditions worsen, while also discussing measures that could be implemented under a more moderate scenario.
He added that rising fuel prices have already increased costs across the public sector, including for the interior and healthcare sectors. The government will therefore continue monitoring the situation to ensure that public services remain fully accessible.
Asked about possible support mechanisms, the minister said that, if required, additional funding would be allocated from the state budget.
Latvia’s Fuel Price Increase Mitigation Law, which entered into force on 1 April, introduced measures aimed at reducing the impact of higher fuel prices on households and the economy.
The legislation temporarily reduced the excise duty on diesel fuel from 467 euros to 396 euros per 1,000 litres, while marked diesel used in agriculture remains subject to a reduced excise rate of 21 euro per 1,000 litres.
On the 18th of June, the Saeima approved amendments extending the reduced diesel excise duty until the end of this year.
Read also: Lithuania’s new government promises tougher approach to migration