Slovakia Raises Diesel Prices for Foreign Drivers

The Slovakian government passed a resolution on July 23, 2022, to allow gas stations to restrict diesel fuel sales and charge a higher price for vehicles with foreign license plates, to protect the domestic diesel supply. According to Prime Minister Robert Fico, these restrictions are a form of positive discrimination for residents of Slovakia and will allow the government to provide local drivers with sufficient diesel supply in light of the ongoing crisis involving the war in Iran.

Fico stated that the influx of Polish drivers has stressed the availability of diesel in northern Slovakia because they have significantly utilized the diesel supply at gas stations in Slovakia, resulting in diesel supply shortages in certain locations. This has also placed additional pressure on the country's largest oil refiner, Slovnaft, which has already been struggling with logistical challenges as a result of the ongoing war in Ukraine.

To calculate prices for diesel fuel purchases by foreign drivers, the government will consider average diesel prices in surrounding countries such as Poland and Austria. The restrictions will be implemented for 30 days and will only apply to diesel fuel.

Fuel prices in Slovakia dropped below the price of diesel in Poland in early March for the first time since Slovakia became a member of the European Union. As a result, many Polish drivers from southern Poland (Podhale) began to purchase diesel in Slovakia instead of their local communities, such as Zakopane.

There are multiple reasons for this price change, including the difference in taxes and fees, differences in the currency exchange rate between the euro and the Polish złoty, transportation costs, and differences in the fuel market structure. However, experts have warned that fuel prices in the region are volatile and could experience rapid changes.

Finally, the restriction on diesel fuel purchases by foreign drivers comes during broader energy disruptions throughout Europe. The ongoing war in Iran has reduced global oil supply because approximately one-fourth of all diesel and gasoil exports that would typically be exported to Europe pass through the Straits of Hormuz.

In addition, Slovakia has experienced disruptions in the supply of crude oil from Russia via the Druzhba Pipeline due to damage in Ukraine caused by the ongoing war there. To address this situation, the Slovakian government has authorized the use of state oil reserves to assist Slovnaft until supply from other sources can be arranged.

Also, tensions between Ukraine and Slovakia are escalating with respect to the delay in restoring the Druzhba Pipeline. Slovakia has accused Ukraine of delaying the restoration of the Pipeline, while Ukraine claims that additional time is required to make repairs to the pipeline following the Russian bombing.