“We always keep reserves. For those who were saying, give it all away…” With this phrase to protothema.gr as he left the general assembly of SELPE, Kyriakos Mitsotakis signalled the intervention that will inevitably be made on fuel, an issue discussed yesterday afternoon at a closed-door meeting at the Maximos Mansion attended by the economic team and the Minister for Environment and Energy.

The surge in international prices amid the parallel fronts in Saudi Arabia, Iran and the Russia-Ukraine war leaves the government with little room not to intervene, as the signs at the pumps are extremely worrying. Hence, speaking from the floor of Parliament yesterday, Kyriakos Mitsotakis warned of a “difficult winter”, echoing warnings issued at various times by senior ministers Takis Theodorikakos and Stavros Papastavrou.

Finance Minister and Eurogroup President Kyriakos Pierrakakis remains more restrained in his adverse forecasts, while Deputy Finance Minister Thanos Petralias, the government’s “treasurer”, is being called upon to stretch the finances as far as possible. Based on the data available so far, the fund contains between €150 million and €200 million as a “reserve” for the period from October through December, although it may be possible to do something better.

Petrol, diesel and heating oil

According to people familiar with the matter, yesterday’s discussion at the Maximos Mansion was more akin to an analysis of the options available. Final decisions will be taken after Mr Mitsotakis returns from the US towards the end of the month, based also on the information then available on prices and their trajectory.

Based on the data so far, it is taken for granted that the subsidy for diesel will continue, while what will happen with unleaded petrol remains to be seen. It is also considered a given that the two refineries in the country, Helleniq Energy and Motor Oil, will be asked to continue their voluntary contribution. As for unleaded petrol, it remains to be seen whether there is scope for immediate state funding as well, as at present the burden has fallen exclusively on the refineries.

The second area of intervention will in any case be heating oil, as if it were to go on sale at today’s prices, it would start at around €1.80 to €1.90 per litre. For heating oil, both an increase in the allowance currently provided and the scenario of direct pump subsidies, along the lines of those for road diesel, are being discussed, depending also on the available fiscal room.

Concern over electricity prices

An additional area of concern for the government is the trajectory of natural gas prices, which are a key factor in determining electricity prices. Based on the data available so far, the government is not planning any immediate intervention on electricity, given that the market’s largest provider, PPC, has already announced a fixed tariff at an attractive price by market standards, below 12 cents per kilowatt-hour. It is recalled that, in a video posted on social media, the Prime Minister had effectively urged citizens to consider this option, while according to reports he has also adjusted his own household tariff accordingly.

Nevertheless, one source of concern for the Maximos Mansion is that there appears to be no willingness at European level to respond to the price shock. This became clear from European Commission President Ursula von der Leyen’s State of the Union address yesterday and indicates the intentions ahead of the European Council, also in view of the October summit.

Mr Mitsotakis has spoken of the need for coordinated action, but as a tough behind-the-scenes battle over the European Budget is under way, it appears rather difficult for the Europeans to do something they did not do even during the severe energy crisis of 2022, following the outbreak of the war in Ukraine.