As we announced last weekend, the government confirmed that fuel prices will go up in 2020. The goal is to "make diesel less attractive."

On Saturday, Minister of Finance Pierre Gramegna announced that a further increase in excise duties on fuel would come into effect in 2020.

The minister gave more details about the price hike at a press conference this Monday morning:

Diesel prices will climb by 3 to 5 cents;

Petrol prices will increase by 1 to 3 cents.

Gramegna specified that the exact increase of prices will be defined after an evaluation in early 2020. The price hike can be expected to take place between February and April. The minister explained that individuals will be less impacted because the fuel prices will still remain inferior to the average prices in the Greater Region. Professionals, who account for three quarters of fuel sales in Luxembourg, may feel the sting a bit more. He added that it is currently impossible to predict the impact of the increase of prices.

The government conceded that they knew "some people cannot rely on efficient public transport. For this reason, the current system of flat-rate deduction of an employee's travel costs between home and workplace will remain in force." The proceeds from the increase in prices will be used to support environmental measures and the promotion of social equity.

Targeting Diesel

The primary objective of the increase of prices remains to "make diesel less attractive" compared to neighbouring countries, Gramegna added. Increasing the prices would allow to reduce the fuel price gap between Luxembourg and its neighbouring countries and consequently decrease fuel export, he concluded.

Fuel tourism has long been criticised in Luxembourg for triggering disruptions and standing in stark contradiction to Luxembourg's engagement in environmental issues. "Current trends in fuel sales are still jeopardizing the achievement of Luxembourg’s targets for CO2 reduction and energy efficiency by 2020," the official statement reads. As a consequence, the Grand Duchy can only achieve its climate and energy objectives by targeting the sale and exportation of fuels, particularly by trucks passing the country in transit.

Excise duties on fuel were previously increased in May 2019 - two cents for diesel and one cent for petrol.

As a reminder, a previous increase in excise duties on fuels entered into force in May 2019, but it was much lower: two cents for diesel and one for petrol.