Fuel & electricity prices have soared across Europe. Yet in Malta, people are paying less than they did in 2013.
This week the international price of oil reached €79 a barrel. Incidentally this was the price in the first full month following the change in Government in 2013.
At the time the price of a litre of petrol was €1.51, while that of a litre of diesel was €1.40. The price of electricity per kilowatt hour was 17c3.
Today, a litre of petrol costs €1.34, while diesel is at €1.21. This means that although the international price of oil is at the same level as at the change in Government, today when going to the pump a motorist saves 17c on petrol, or 11%, and 19c on diesel, or 14%.
The price of electricity is 13c per unit, which means a 25% discount on what would have been paid in April 2013.
Between March 2008 and March 2013, the international price of oil increased by $4 a barrel, an increase of 4%. But the Nationalist administration used this meagre increase to raise the price of fuel by 36%. At the same time, that administration had raised the price of electricity by 71%. Thus, under the excuse of rising international prices, the Nationalists had raised the price of fuel by 9 times the increase in the international price of oil, and electricity by 17 times.
Today when going to the pump a motorist saves 17c on petrol, or 11%,
and 19c on diesel, or 14%.
In truth, a significant part of these increases were higher excise duties imposed by that administration in an attempt to balance its books. Just consider that higher taxes on fuel accounted for 13c of the 39c increase in the price of petrol during the last GonziPN administration.
In contrast, since 2013 Labour administrations focused on boosting the purchasing power of families. The reduction inthe price of fuel and electricity means that the cost for an average family of these two essentials is €665 per year less than under the Nationalists. Of this, €150 is in lower electricity bills and the rest is reduced spend on fuel.
Prices in Malta much lower than in the rest of Europe
This enhancement in purchasing power also arises when comparing Maltese households to those across Europe. The average price of petrol in the EU today is €1.68, 34c more than in Malta, whereas diesel in the European Union is €1.57, 36c more than Malta. When it comes to the price of a unit of electricity across the European Union, this has now reached around 23c3, or 10c more than in our country.
In the last 12 months fuel has risen by 27% on average across the European Union, while electricity has increased by almost 21%. If these increases had occurred in our country, on average our families would be paying €500 more per year for these essentials.
In December Malta’s inflation rate was 2.6%, while across the European Union it reached 5.3%. A mathematical calculation indicates that if the price of fuel and electricity had increased like in the rest of Europe instead of remaining stable, inflation in our country would have reached 4.5%. That is to say, our country would have had a rate almost twice its current rate and much closer to that in the rest of the EU.
Apart from a substantial social impact, this would have been a major economic setback. This because our businesses would have lost their competitiveness because they would have had much higher costs and would have had to raise their prices. This would have led to less exports and a lower growth rate.