"These last few months have been truly catastrophic.” Romain Hoffmann did not mince his words on Thursday when faced with the decline in fuel sales in Luxembourg. Between the covid-19 pandemic that reduced the need for fuel and now the rebates granted on excise duties , the president of the Groupement Énergies Mobilité Luxembourg (GEML, formerly the Groupement Pétrolier) has--by his own admission--seen better days.

Sales of diesel, the sector's best-selling product, fell by 21% between 2019 and 2020, as well as between 2020 and 2021, according to figures presented to the press on Thursday. The forecasts suggest that the same trend will continue at the end of the current year, marked by the disappearance of the attractiveness of Luxembourg's tariffs compared to neighbouring countries. For example, , GEML estimates that fuel sales have slowed by 35% to 45% in September and October 2022.

I think the best years for the sector are over, we have to adapt.

Romain Hoffmann, President, Groupement Energies Mobilité Luxembourg

In this context, the organisation presented a series of grievances, starting with the request that the government "adapt the taxation of petroleum products in a prudent manner in order to analyse their impact on fuel sales and to give the sector the necessary time to reorient itself according to the demand for fuel.”

This request is hardly conducive to the clear government policy to reduce greenhouse gas emissions by 55% between 2005 and 2030. "I think that the best years for the sector are over, we have to adapt,” admitted Hoffmann.

Currently, excise duties and VAT account for 37% of the price of a litre of diesel, according to the group. While on the one hand the VAT rate follows the rise in oil prices, the amount of excise duty remains fixed at €0.42/litre.

"Our margin remains constant in the price structure, we are in a situation where the more prices rise, the lower the margins for our members.” Hoffmann estimates that it corresponds to €0.16/litre, which is the amount that it costs per litre to transport and distribute petroleum products.

Tobacco remains a driving force for attractiveness

And in the face of the electrification of the car fleet, hopes of profitability on recharging stations are slim, given the fact that most recharging takes place at home.

The Group does not rule out the closure of some of the 232 service stations in Luxembourg, which employ some 2,750 people. However, there is still a source of profitability: "The shops are very important for our sector: they become convenience stores and without them we could not survive.” While tourism at the pump is clearly in decline, this is not the case for tourism linked to tobacco products, where revenues from excise duties are on the rise in Luxembourg.

It should be noted that although diesel sales have fallen sharply in Luxembourg, last year they accounted for 55.4% of volumes sold. Petrol sales have risen to 12.9%, thanks to the evolution of the car fleet. As for jet fuel volumes, they have never been so high in the country, reaching almost a quarter of the market (23.3%). While the pandemic has affected airliner traffic, cargo traffic has taken off. The record profits of Cargolux, a major operator in Findel, bear witness to this.

This article was first published in French on . It was translated and edited for Delano.