Keldo: Latvia's excise cut only halfway reached pump prices
ERR reported on 8 October 2026 that, according to Minister of Energy Erkki Keldo, only half of Latvia's fuel excise duty cut actually reached pump prices. Estonia's government does not plan to lower the excise duty despite a proposal from the Chamber of Commerce and Industry. The story matters to anyone who fills up a car or factors fuel costs into their budget.
What happened and when
On 8 October 2026, ERR quoted Minister of Energy Erkki Keldo as saying that Latvia's Competition Council had estimated that only 53 percent, essentially about half, of Latvia's diesel excise cut was passed on to pump prices. In other words, the rest of the reduction stayed with fuel sellers as extra margin rather than reaching consumers.
Estonia's Chamber of Commerce and Industry had proposed cutting the diesel excise duty for six months to the EU minimum level, from the current 0.428 euros down to 0.330 euros per litre. Keldo and Prime Minister Kristen Michal said no such step is planned at the moment, since the cost to the state budget would be substantial while, based on Latvia's experience, the actual impact on final prices is uncertain.
What it actually means for consumers
Keldo pointed out that as of 5 October, the average pump price of petrol in Estonia was 1.94 euros per litre versus 1.96 euros in Latvia, while diesel stood at 2.09 and 2.12 euros respectively. So despite Latvia already having cut its excise duty, prices in the two countries remain very similar. This shows that the final price depends not only on taxes but also on global market prices, refining capacity, and trade margins.
Prime Minister Michal said that if Estonia brought its excise duty down to Latvia's level, the government's own decisions could move the litre price by roughly 10 to 12 cents, whereas pump prices have already risen by more than 60 cents per litre since the start of the Hormuz crisis. In other words, even an excise cut wouldn't cover much of the recent price increase, and Latvia's example confirms that part of any potential relief may never reach consumers at all.
What it would cost the state budget
According to Keldo, excise revenue would drop by roughly 210 million euros if both fuel excise rates were brought down to the EU minimum for the whole of 2027. Michal added that cutting the duty only to Latvia's level would cost around 10 million euros a month, or about 120 million euros a year, which he called the minimum scenario.
The prime minister stressed that such a sum would have to come from somewhere, and the state needs to weigh both business competitiveness and the overall state of public finances, including the budget deficit.
Example: how to calculate your own fuel costs
Since the excise duty isn't changing for now, it makes more sense to track your fuel budget based on the actual pump price. Suppose you drive 1,200 kilometres a month in a car that averages 7 litres per 100 kilometres, with diesel priced at the 2.09 euros per litre Keldo mentioned. That works out to 1200 / 100 × 7 = 84 litres a month, costing 84 × 2.09 = 175.56 euros.
If the price rose by, say, 10 cents per litre to 2.19 euros, the same amount of fuel would cost 84 × 2.19 = 183.96 euros, that is 8.40 euros more per month. Anyone can work out their own exact fuel costs using the fuel cost calculator, by entering mileage, average consumption, and fuel price. The percentage calculator can help estimate how a percentage price change affects your budget.
What the government does next
The government has tasked Keldo with monitoring global fuel price movements and assessing their impact on consumer confidence and inflation. Keldo said initial assessments from the Bank of Estonia, the Ministry of Finance, and market participants suggest the impact is currently rather small, though no one can predict if or when the situation might change.
Michal added that the government is also watching the risk of cross-border shopping, since any further temporary tax changes in Latvia could affect where Estonian consumers choose to buy fuel. No concrete decisions on changing the excise duty have been made so far, so consumers should base their planning on actual pump prices rather than expect excise-related relief anytime soon.
Source: ERR, Keldo: Lätis jõudis kütuse aktsiisilangetusest tanklate hindadesse vaid pool (2026-10-08)
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