Fleet News

Fleets worry over fuel price rises

May 2000: Portugal is a country that seems to like swimming against the tide.

When the oil producers decided to turn on the tap, thus lowering the price of a barrel of crude oil in all international markets, the Portuguese Government abandoned its subsidy policy destined to keep fuel prices artificially low, and instead decided to announce huge rises: 8.7% for a litre of diesel and 10% for petrol.

The increases occurred at the end of April and have cast doubts over the country's inflation goals. A 3% inflation figure (triggered by higher costs in global production and distribution) is now considered quite likely by the end of the year and should be enough to inspire the EU to give a good dressing-down to our Government.

Moreover the European Central Bank has announced a further leap in European taxes, which will presumably not help Portugal to meet the terms of single currency criteria. It is not difficult to understand the fleet manager´s problems after this fuel tax hike, which has prompted enormous protests by all the national unions with large scale industrial action and strikes.

All market sectors expect the Government to have learned from the experience, underlining the fact that price fixing can only be done at an international level rather than to satisfy local concerns and please voters.

Meanwhile, liberalisation of fuel prices has been promised for the next state budget. In new car sales terms, the market was already showing signs that it was not firing on all cylinders. March witnessed a setback of 14.7% and the first quarter closed 4% down.

This is a general tendency with only one exception; off-road vehicles that benefit from an 80% tax discount. This previously niche sector has boomed by 34% and now matches conventional passenger car registrations one-for-one.

  • Joaquim Oliveira is editor in chief of Motorpress, Portugal's leading automotive publisher. (May 2000)
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