Maltese consumers may be losing out on the tumbling international fuel prices but they remain in the black compared to their European counterparts when considering costs over the past nine months.

However, with international fuel prices expected to continue to fall, Maltese consumers will soon be out of pocket if the government persists with its current hedging policy without revising the price downwards, an exercise conducted by Times of Malta shows.

If the government insists on its hedging policy, Maltese consumers will soon lose all the benefits gained

Despite the pressure being mounted by the Nationalist Party to revise the price of fuel at pumps and reflect international prices, the government has so far resisted, arguing that, on a long-term basis, consumers still paid less than their EU counterparts.

This newspaper compared the changes in the price of unleaded petrol and diesel in Malta to the EU average since last May, when Prime Minister Joseph Muscat announced that prices would be locked for the rest of the year, leading to a 2c cut in the price of unleaded petrol.

European Commission data shows that while in Malta the price of unleaded fuel fell by a further 2c (on January 1) to the current €1.42 a litre and by 1c to €1.35 for a litre of diesel, the EU average dropped by a much higher margin.

Since last May, the EU average price per litre for unleaded petrol has fallen by 25c to €1.30 last week and by 22c in the case of diesel.

According to European Commission data, Malta now has the third highest price for unleaded petrol and diesel in the EU.

When compared to the five countries having the highest fuel prices, the lower prices in Malta since Dr Muscat’s announcement are negligible (see tables).

For unleaded fuel, Greece, which has the fourth highest rate in the EU, has seen its price per litre fall by 28c since May. The Netherlands, which currently has the costliest unleaded fuel at €1.48 a litre, has cut the price by 25c since last May.

With regard to diesel, Sweden, which has the fifth highest rate in the EU, slashed its price by 26c at the same time that Malta lowered it by 1c.

Diesel is most expensive in the UK, where it sells at €1.49 a litre. Still, since last May, the price fell by 16c.

According to a fuel trader, it is evident the Maltese government chose a policy of stability over volatility.

“On paper, although the government has so far never revealed the rate at which it locked its prices, fuel in Malta should have gone down much more than it did. Most probably, the government is making a lot of money from the situation,” the trader said.

Another exercise comparing the moving average price of fuel in the EU and Malta over the past nine months shows that while pump prices here have remained stable, albeit high, the average in the EU has at times been much higher throughout the whole period.

Most probably, the government is making a lot of money from the situation

This means that while Maltese prices are now very high since the downward spiral of international fuel prices, consumers on the island are still benefiting slightly from last May’s price hedging when considering the whole nine-month period.

Taking the average price in Malta and the EU over the nine-month period, it emerges that while on average, an EU consumer paid €1.50 per litre for unleaded petrol, Maltese consumers forked out €1.44.

The difference is lower when it comes to diesel, where the average nine-month price stood at €1.36 or 2c per litre below the EU average.

“Until now, Maltese consumers still appear to have gained from last May’s locking of prices,” according to the fuel trader.

“However, it is evident this won’t last much longer as the average EU price is expected to continue falling. This means that if the government insists on its hedging policy, Maltese consumers will soon lose all the benefits gained.”

The risk of Malta having to pay higher fuel prices than the EU average due to a drop in the international market was highlighted by Times of Malta last May during the Prime Minister’s press conference, at which he announced the hedging process.

The Prime Minister had said: “The prospect of prices going down is unlikely in the current international climate.”

How fuel prices compare across the EU