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ENERGY

Why Italy’s fuel prices are among the highest in Europe – and rising

Petrol, diesel and methane prices are surging in Italy along with household energy bills as the price of natural gas spikes across Europe. Here's how much prices are going up - and why the cost increases are hitting Italy so hard.

A station attendant fills a car with petrol.
Methane gas has doubled in price in Italy. Photo by Andreas SOLARO / AFP

Fuel prices overall are now at their highest since 2014, while the cost of Italy’s cheapest fuel source, methane gas, has doubled according to fuel distributors.

Since the beginning of this year, petrol has gone up in price by over 15% according to motoring reports, meaning it now costs €11-13.50 more on average to fill up.

Figures for diesel are similar, with a 14.5% increase since the start of 2021, costing just under €12 extra for a full tank.

That means an expected average of €324 extra spend per family per year to run their vehicle.

Higher fuel prices further swell living costs for people in Italy, as electricity bills shot up by nearly 30 percent from Friday, while gas bills also jumped up by 14 percent.

READ ALSO: Rising energy prices: How to save money on your bills in Italy

Italy’s rising fuel costs for both petrol and diesel are among the highest in Europe, according to this chart using data from the European Commission and petrol station websites.

Only the UK, Finland, Denmark and Sweden are recording higher costs per litre of either petrol or diesel, according to the data.

France and Germany follow Italy for petrol prices while France comes second for diesel.

A man fills his van with petrol.
Fuel prices continue to rise, with methane doubling in cost. Photo: Franck Fife / AFP

In some parts of Italy, drivers with cars running on methane gas can expect to pay up to €2 per kilo – a 100 percent increase on the €1 per kilo that it was last week, according to news reports.

The latest hike, described as ‘skyrocketing’ by various Italian media outlets, marks yet another increase in the cost of this once much cheaper fuel source, as it has in fact reportedly tripled since the start of the year.

Italy’s national distributor of methane gas, Federazione Nazionale Distributori e Trasportatori di metano (Federmetano), stated that the value of methane gas has reached levels “no one would have ever imagined”.

It’s a blow to a sector that has been gaining in popularity, as Federmetano recorded consumption of this fuel in the first half of 2021 as 13% higher compared to the first half of 2020.

The organisation claimed this figure follows the progressive increase in the number of CNG (compressed natural gas) vehicles in circulation over the last five years, which produce much fewer carbon emissions than conventional petrol cars.

The trend threatens to put the entire transport sector that uses this fuel in crisis, with reports of firms that run on methane coming to a standstill.

A plant in Ferrara, Emilia Romagna, has had to close for a few weeks due to “the critical situation that the company is going through as a result of the increase in the cost of methane gas”.

Federmetano has explained that the sudden spike in costs is down to various factors, including low levels of storage at European sites due to a long winter and increased heating requirements, the Asian economy recovering with great demand for energy, ship supplies diverted to Asia and other markets generally willing to pay more.

READ ALSO: When can you switch on your heating in Italy this winter?

Cuts in supplies to Europe from Russia due to scheduled maintenance have also been noted, as have setbacks in authorisations for new imports, as Europe has decreased its production of natural gas.

This has left Italy vulnerable and unable to counter the cost increase as these developments are happening “at a level far above the bargaining abilities of road distribution entrepreneurs,” according to the fuel distributor.

Meanwhile, the cost of petrol and diesel has increased over the past three months, according to data from Italy’s Ministry for the Ecological Transition.

Petrol rose from €1.613 per litre in June to €1.654 per litre in August. For Diesel, the price jumped from €1.473 per litre to €1.505.

Over the last year, all fuel sources have gone up in price, based on the average monthly cost. Going back further to July 2020, petrol was recorded at €1.403 per litre and diesel at €1.289 per litre.

A graph showing the rise in petrol and diesel prices in Italy.
A graph showing the rise in petrol and diesel prices in Italy. Source: Ministry of Ecological Transition

The steep percentage increases are also partly due to the fact that some of Italy’s lowest fuel costs were recorded during the pandemic in 2020, with May seeing the greatest dip in the cost of petrol at €1.365 per litre.

Natural gas price increases are however causing a surge in energy costs across Europe and beyond.

Italy is particularly vulnerable to price shocks as it is highly dependent on imports and consumes a large amount of gas.

Some 40 percent of its primary energy consumption is gas, compared with about 15 percent in France, according to official statistics for both countries.

As Covid-19 restrictions ease, more economies are experiencing an upturn and one consequence is a refreshed demand for energy, affecting costs for running cars and homes.

Italian Prime Minister Mario Draghi said last week that many of the reasons for the energy price increases were temporary but called for long-term action, including at a European level, to address the problem, including through diversifying supplies.

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MONEY

How much does it cost to raise a child in Italy?

How big is the financial commitment parents have to make in Italy to pay for their offspring’s needs and expenses until they’re grown up and independent? Here's a look at the predicted costs.

How much does it cost to raise a child in Italy?

Family is the bedrock of Italian society, but it’s also an unbalanced economic crutch, propping up children who leave home much later than most of their European counterparts.

Various factors are at play, from a declining birth rate, youth unemployment, being unable to get on the property ladder to young Italians moving abroad in search of better financial opportunities.

It probably comes as little shock, then, that parents in Italy end up forking out huge sums of cash to support their offspring through childhood and early adulthood (and beyond).

Even just up to the age of 18, raising a child in Italy can cost upwards of €320,000, according to data from Italian consumer research body ONF (Osservatorio Nazionale Federconsumatori).

The average spend of raising a child from 0-18 years is €175,642, but it rises in families with high incomes, classed as over €70,000 per year.

READ ALSO: Italian class sizes set to shrink as population falls further

Researchers noted that the cost of bringing up children has jumped up following the effects of the pandemic too: compared to 2018, child-rearing expenses increased by 1.2 percent by 2020.

The decrease in expenditure related to transport due to spending more time at home, as well as those incurred for sports and leisure activities, was not enough to mitigate the increase in costs for housing and utilities, which increased by 12 percent compared to 2018.

Photo by Suzanne Emily O’Connor on Unsplash

Food prices rose by 8 percent compared to 2018 and education and care jumped by 6 percent for the same timeframe.

In fact, Italy ranks as the third most expensive country in the world for raising children, only coming behind South Korea and China, according to data from investment bank JEF.

The pandemic has contributed to extending an already growing phenomenon: the decrease in annual income of Italian households.

Household income dropped by 2.8 percent from 2019 to 2020, the report found, citing data from national statistics agency Istat. It marks a further squeeze for families, especially low-income and single-parent families.

Depending on earnings, the amount needed to bring up a child until the age of 18 varies considerably.

READ ALSO: ‘Kids are adored here’: What being a parent in Italy is really like

A two-parent family with an annual income of €22,500 spends an average of €118,234.15 to bring up a child until the age of 18; for the same type of family but with an average income of €34,000 per year, the total expenditure to bring up a child increases to €175,642.72.

For high-income families, stated as over €70,000 annually, raising a child costs €321,617.36 on average.

The figures mark an increase of around €5,000 for low- and middle-income families, and a much sharper rise of €50,000 for high-income families, compared to ten years ago.

The money gets spent on housing, food, clothing, health, education and ‘other’ categories. The report revealed that the average spend on a child aged 16 years old is almost €11,500 annually, amounting to €955.78 per month.

Almost €2,000 per year gets spent on food, €1,615 goes on transport and communication, €782 goes on clothing and €1,600 goes on education annually, the report found.

They begin small, yet the costs are anything but. (Photo by LOIC VENANCE / AFP)

For the ONF, “these data highlight how, today more than ever, having a child is becoming a luxury reserved for the few, which fewer and fewer Italians are able to afford.”

READ ALSO:

The numbers on supporting children after their 18th birthday are a little hazier, as when children eventually fly the nest varies – but figures from Eurostat show that Italy ranks third in Europe for the average oldest age at which children move out of the parental home, at 30.2 years old.

Only young people from Croatia and Slovakia wait longer to live independently, while the EU average for flying the nest is 26.4 years old.

Even then after eventually leaving home at over 30 years old, it’s not entirely clear how many Italians are fully independent once they get their own address, or whether their parents continue to bankroll their living costs.

Italy’s president Sergio Mattarella sent a message to Italy’s Birth Foundation (Fondazione per la Natalità) in May stating, “The demographic structure of the country suffers from serious imbalances that significantly affect the development of our society.”

In response to worsening economic circumstances, the Italian government has recently pledged to do more to help people have families and reverse Italy’s continuing declining birth rate.

It has introduced the Single Universal Allowance (L’assegno unico e universale), but along with it has dropped various so-called ‘baby bonuses’ that provided lump sums to new parents.

The new allowance is a monthly means-tested benefit for those who have children, or are about to have a child. It is payable from the seventh month of pregnancy until the child reaches the age of 18 or in some cases, 21. For more information on what it is and how to claim it, see here.

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