San Francisco Frontiers - Spain to cap gas price hikes, extend fuel discounts

Economy Minister Carlos Cuerpo said the package aimed to "extend and adapt" support measures first taken in March after the conflict, triggered by US-Israeli strikes on Iran, plunged global energy markets into turmoil.

The volatility has affected Spain's dynamic economy, which is less dependent on fossil fuels but is suffering higher inflation as a result of spiralling energy costs.

Cuerpo told a press conference that the government had approved a discount of 20 euro cents ($0.23) per litre of petrol and diesel for October amid a "significant deterioration" of the situation.

The discounts would progressively decrease to 13 euro cents per litre in November and six cents in December, but a "reactivation clause" would be available if prices spiked by more than 15 percent, Cuerpo explained.

Ecological Transition Minister Sara Aagesen had earlier announced the limit to gas price spikes as EU ministers met in Dublin to discuss preparations for the upcoming winter.

The price of butane tanks, used by many households for cooking and heating, will also be capped at 19.55 euros, Aagesen told journalists.

"If we didn't put these limits, the price for consumers, for households, would rise by more than 45 percent starting next month," she said of the gas cap.

"These are essential measures to protect against this vulnerable situation," she said, without specifying how much they would cost.

Soaring energy prices pushed Spanish inflation up to 4.9 percent year-on-year in September, according to a first official estimate released on Tuesday -- the highest level since February 2023.

The leftist government approved in March a package of around 80 measures to limit the impact, for a total cost of five billion euros, which it says helped 20 million households and three million businesses.

Y.Harris--SFF