Fuel prices in the Azores and Madeira remain below €2 per litre

Despite rising fuel prices, some parts of the country still allow drivers to fill up for less than €2 per litre. This is the case in the Azores and, for petrol, in Madeira as well.

Fuel prices in the autonomous regions are governed by different rules from those used on the mainland, including their own taxation arrangements. As a result, the amount paid at the pump can differ considerably.

In the Azores, the maximum prices for both diesel and unleaded petrol are currently below €2 per litre. According to the Government of the Azores, diesel costs €1.885 per litre and petrol costs €1.854 per litre.

In this region, maximum fuel prices are set each month according to changes in the monthly Europe Price (PE), a benchmark indicator for petroleum products.

Even so, current prices represent a substantial increase compared with August: 16.3 cents for standard diesel and 3.5 cents for standard petrol.

What about Madeira?

Madeira reviews its maximum prices weekly, as on mainland Portugal. For the week from 21 to 27 September, the maximum price of standard petrol was set at €1.98 per litre, while standard diesel could cost up to €2.077 per litre, according to figures from the Regional Directorate for Economy and Land Transport.

Following this week's 4.1-cent-per-litre increase in standard diesel, the maximum price of this fuel is no longer below the €2-per-litre threshold, unlike in the Azores. Standard petrol, however, remains below that level after falling by 2.6 cents per litre this week.

Why are fuel prices lower on the islands?

The price gap is not solely the result of changes in international oil quotations. Regional taxation and price-regulation arrangements also have an important influence.

Both the Azores and Madeira have the autonomy to tailor part of national taxation to regional circumstances. The Regional Finance Act permits their Legislative Assemblies to cut personal income tax, corporation tax and VAT rates by up to 30%, while also laying down specific provisions for adjusting excise duties.

For fuel in particular, the Excise Duties Code sets out separate rules for each region. In the Azores, the unit rates of the Tax on Petroleum and Energy Products (ISP) are determined regionally. The rates applied on the other islands are lower than those on São Miguel, compensating for additional transport and storage costs.

In Madeira, ISP rates are likewise set by order of the Regional Government, within the limits established by national legislation.

VAT is another significant difference. The standard rate is 16% in the Azores and 22% in Madeira, compared with 23% on the mainland. Since VAT is charged on the total price, which already includes ISP, the combined tax burden is generally lower in the Azores.

It is nevertheless important to distinguish between the systems used in the two regions. Maximum prices are reviewed monthly in the Azores, whereas Madeira updates them every week. In both cases, the set amounts are retail price ceilings, so they do not necessarily mean every filling station charges precisely the same price.

And in mainland Portugal?

It is still possible to buy fuel for under €2 per litre in mainland Portugal, although doing so is becoming increasingly difficult. According to data from the Directorate-General for Energy and Geology, these are the filling stations offering the cheapest fuel in mainland Portugal:

Standard diesel:

• Intermarché Vilar Formoso: €1.939/l;
• Carbuiberia Braga: €1.973/l;
• BP Barcelos - Ucha (Carbuiberia): €1.973/l;
• CEPSA Maceda: €1.973/l;
• PA Fazendas de Almeirim (Carbuiberia): €1.973/l.

95 unleaded petrol:

• Transforpel Combustíveis Calços Martingança: €1.929/l;
• Transforpel Combustíveis Marinha Grande: €1.929/l;
• Intermarché Vilar Formoso: €1.929/l;
• Transforpel Combustíveis Moncarapacho: €1.939/l;
• Transforpel Combustíveis Chão de Sapo: €1.939/l.