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ECONOMY

EXPLAINED: Why are fuel prices increasing faster in Austria than elsewhere in the EU?

The price of petrol in Austria has risen by 46 cents in the last two weeks alone - faster than anywhere else in the EU. Politicians and experts are now calling for an industry-wide investigation.

EXPLAINED: Why are fuel prices increasing faster in Austria than elsewhere in the EU?
A photograph taken on March 8, 2022 shows a board with prices of gasoline and diesel at a petrol station, in Essen, western Germany. (Photo by Ina FASSBENDER / AFP)

In no other European Union country have the prices of the Eurosuper petrol risen as sharply since the end of February as in Austria, according to analysis by Verkehrsclub (VCÖ), Austria’s Transport Association. 

The association has called for the country’s Federal Competition Authority (BWB) to look into the rising prices. 

According to the VCÖ analysis, a litre of Super on March 14th cost €1.987, some €0.46 more than two weeks before the end of February. 

When it comes to diesel, Austria had the second highest price increase in the EU after Germany (€0.57), with €0.50, the VCÖ said.

However, the reason is not due to taxes, as most European countries have not made any changes to fuel taxation and taxes in Austria are lower than in most other countries, VCÖ said.

So why are fuel prices increasing? 

Fuel prices have been rising worldwide, not just in Austria or Europe. 

They are usually determined by a combination of the price of crude oil in international markets, the costs for processing in refineries, distribution costs, profits, taxes, and any possible government interference.

READ ALSO: UPDATED: How to save money on fuel costs in Austria

The fundamental economic law of supply and demand plays a significant role when it comes to international prices. As the war in Ukraine decreases supply, especially as sanctions hit oil-rich Russia, and concerned countries increase demand, prices get higher. 

Additionally, global markets trade in US dollars. With the euro losing its value against the currency, the prices have increased compared to a year ago. 

These factors affect every country, with the eurozone facing historic inflation spikes over the past few months. 

Why are prices higher in Austria?

Other factors that affect oil prices are domestic. The explanation for why prices are higher in Austria than in other countries concerns a mix of processing and distribution costs, company profits, taxes and government policies. 

One of the main suspicions in Austria is that domestic oil distributors have not passed on fluctuations in international prices when they drop to keep profits high. 

READ MORE: Cost of living: Seven tips to save money in Austria

So, when prices go up internationally, domestically, they also increase. However, when they drop by a few cents, they would stay the same in Austrian petrol stations, increasing company margins.

Green vice-chancellor Werner Kogler spoke of these suspicions on Twitter: “although the price of oil drops for the third day in a row, the prices at the stations remain the same.”

“There is a suspicion that a few oil companies are earning big money at the expense of the people”, he said.

“We will therefore contact the Federal Competition Authority, which could carry out an industry investigation as a first step. If things aren’t going right and corporations make a deal out of the war, we have to intervene,” the vice-chancellor warned.

Austria has only three major mineral oil companies, which would allegedly make it easier for a price-fixing deal to happen. 

Policy changes

The federal government has been considering several measures to halt increases in inflation and fuel prices. 

In Hungary, the government has set a maximum fuel price, making Austrian petrol more expensive in comparison. Similar measures have been taken by neighbouring countries. 

Austria has considered a fuel subsidy and reducing taxes, short-term solutions to assist the general population, while a price-fixing competition could take months.

The Transport Association has also brought more long-term suggestions, besides the call for a closer investigation on prices.

The VCÖ wants the government to quickly take measures to reduce the oil dependence on transport. It also sees the need for policies that would make it easier for the population to be mobile in an energy-saving manner, such as better public transport.

The associations also called for a speed limit of 100km/h instead of 130km/h on motorways as a “quickly implementable measure which saves money”.

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ECONOMY

Diversity and jobs: How migrants contribute to Vienna’s economy

International business owners in Vienna bring in billions of euros in revenue and taxes each year, according to a recent survey by the Chamber of Commerce.

Diversity and jobs: How migrants contribute to Vienna's economy

New figures show that Vienna’s international entrepreneurs do more than simply boost diversity in Austria’s capital city – they also significantly contribute to the local economy.

The Wirtschaftskammer (Chamber of Commerce) has revealed that business owners in Vienna with a migration background generate € 8.3 billion in revenue and create around 45,500 jobs.

Plus, these companies pay around € 3.7 billion every year in taxes and duties, reports ORF.

READ MORE: Austrian presidential elections: Why 1.4 million people can’t vote

Walter Ruck, President of the Vienna Chamber of Commerce, said: “Companies with a migrant background not only enrich the diversity of the corporate landscape in Vienna, they are also an economic factor.”

Ruck added that more than 200 international companies move to the capital each year and said the diversity is helping Vienna to financially recover from the pandemic. 

The Chamber of Commerce considers a business owner to have a migration background if they were not born in Austria and/or they have a non-Austrian nationality.

READ ALSO: What are the rules on working overtime in Austria?

According to ORF, there are 34,000 entrepreneurs in Vienna with a migration background and 7,400 of those business owners have Austrian citizenship.

Additionally, 4,500 business owners have Slovakian nationality, 3,800 are from Romania and 2,600 have German citizenship.

The most popular business sector for people in Vienna with a migration background is retail, followed by real estate and technical services.

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