For years, Portuguese drivers have suspected that fuel prices rise like a rocket but fall like a feather. A new study from the country's energy regulator suggests that perception is not backed by the data.
The Energy Services Regulatory Authority (ERSE) published a detailed analysis on Friday covering road fuel prices from January 2023 to July 2026. The study, requested by Environment and Energy Minister Maria da Graça Carvalho, found that pump prices in Portugal moved in line with international quotations for refined petrol and diesel, rather than directly with crude oil prices. It concluded that there was no evidence of systematic profiteering by fuel operators.
Testing the 'Rockets and Feathers' effect
The central question was whether price increases are passed on to consumers faster than decreases of the same magnitude—a phenomenon often described as 'Rockets and Feathers'. ERSE's analysis found no persistent asymmetry. Increases and decreases began to be transmitted in the same period, although for diesel the initial drop was slightly less pronounced. After four weeks, that difference was no longer statistically significant.
The report states: "The results therefore do not support the existence of a persistent 'Rockets and Feathers' effect." It also noted that the findings "do not support the conclusion that fuel companies have taken advantage of the situation to increase their margins across the board." However, the regulator cautioned that the aggregated data cannot rule out isolated cases of opportunistic behaviour by individual companies.
Why Spanish prices are lower
Many Portuguese living near the border cross into Spain to fill up, where prices are noticeably cheaper. ERSE attributes this almost entirely to taxation. In the second quarter of 2026, before taxes, petrol and diesel were actually more expensive in Spain—by 5.9 cents per litre for petrol and 10.6 cents for diesel. After taxes, however, Portuguese prices were 41.8 cents higher for petrol and 25.1 cents higher for diesel.
The regulator emphasised that taxation plays a crucial role in the final price consumers pay. In 2026, a temporary adjustment mechanism for the ISP (fuel tax) helped cushion part of the price surge during the period of greatest market tension.
Compared with the rest of the European Union, Portuguese prices—both with and without taxes—evolved in line with the EU and euro area averages. Unlike Spain, where the tax burden varied, Portugal kept its tax per litre constant over the period.
Prices set to rise again
Despite the study's findings, motorists face another increase next week. According to projections from the Automóvel Club de Portugal (ACP), diesel prices are expected to rise by 10 cents per litre and petrol by 9 cents. If confirmed, the average price of diesel would reach €2.068 per litre, while petrol would climb to €1.977, erasing the drop recorded last week.
The forecasts are not final, as they depend on market closing prices and any government adjustment to the ISP. Lisbon has been applying an extraordinary discount on the fuel tax whenever the increase exceeds 10 cents per litre.
The study comes amid heightened volatility in global energy markets, driven by the conflict in the Middle East and shipping restrictions in the Strait of Hormuz. For a broader perspective on Europe's energy challenges, see the continent's industrial foundations. Meanwhile, Portuguese consumers may find some relief in the recent price drop, though it appears short-lived.
