Poland lets fuel shield expire as PM Tusk tells motorists: 'the budget has its limits'

Polish motorists face sharply higher fuel bills after the government allowed its Ceny Paliwa Niżej (CPN) price-shield programme to lapse at the end of June, and Prime Minister Donald Tusk on Friday said there was no prospect of bringing it back in the near term. The package, introduced in late February after the outbreak of conflict between the United States and Israel on one side and Iran on the other, had cut VAT, reduced excise duty and imposed a maximum retail price on petrol and diesel. The Ministry of Finance estimates the total cost at around PLN 4.7 billion.

Government draws a line

Speaking to journalists in the Sejm on Friday, Tusk said the treasury could not keep writing cheques forever. He acknowledged that Poland had maintained the lowest fuel prices in Europe during the CPN period but stressed that budget endurance has limits.

We cannot endlessly lay out money for this from the state budget. We held out for a long time, keeping the lowest fuel prices in Europe, but this budget endurance also has its limits.

Tusk noted that the government had said from the outset the intervention would be temporary and had already extended it.

The deficit constraint

Finance minister Andrzej Domański reinforced the fiscal argument in a TVN24 interview the same day, pointing to Poland's high budget deficit. After June 2026 the deficit exceeded PLN 123.7 billion, driven in part by heavy defence spending. Domański also observed that a barrel of crude now costs roughly $80, compared with over $100 when the CPN shield was first erected, weakening the case for emergency measures.

Poland currently has a high budget deficit, which is linked to our enormous outlays on defence.

Domański added that the government is monitoring events in the Middle East, oil prices, the Strait of Hormuz, refinery margins and the availability of diesel, noting that some regions of Europe are experiencing diesel supply problems.

Geopolitical rollercoaster

Both Tusk and Domański linked the decision to the volatile security situation in the Middle East. Tusk said the government could not commit to full price protection without knowing how the situation in the region would develop or what decisions US President Donald Trump might take. He described the mood as a carousel of emotions.

You know what this carousel of emotions looks like. Today there is a ceasefire, tomorrow there is war, the day after a ceasefire, the day after that bombardments, and that affects fuel prices.

Prices at the pump

Retail prices have already jumped. According to e-petrol data, the average price of Pb95 petrol rose by 21 groszy over the past week to PLN 6.99 per litre, while diesel climbed 26 groszy to PLN 7.19. LPG, by contrast, has been falling steadily since the second half of April, shedding 3 groszy to reach PLN 3.17 per litre. Analysts at e-petrol expect Pb95 to trade between PLN 7.09 and PLN 7.22 per litre next week and diesel between PLN 7.51 and PLN 7.65. On motorways and express routes prices are already approaching PLN 8 per litre. Experts attributed the pace of increase to product prices rising faster than crude, reflecting a global shortage of refinery capacity and refining margins that have hit record highs in recent days.

What about parliament

A parliamentary bill has been tabled that would bring back the 8% VAT rate on petrol, diesel, biocomponents and LPG, and would also extend the package to include an excise cut and a waiver of the retail sales tax until 30 September. Consultations run until the beginning of August, though its chances of passing are described by Dziennik Bałtycki as rather small.

On international crude markets, West Texas Intermediate for August delivery was at $79.24 per barrel on NYMEX, down 0.45%, while Brent for September was at $84.42 per barrel, down 0.62% after a 12% surge over the three previous sessions.