Diesel faces another blow as taxes rise in Europe

For decades governments within the European Union have taxed diesel at a lower rate than rival gasoline, but that advantage is eroding fast as they seek to clean up the environment, and the fallout from Volkswagen Group’s emissions-cheating scandal rumbles on more than three years after it happened.

The shift illustrates a fundamental change in the treatment of a fuel that has long been favored across the continent.

“We expect diesel tax to continue to go up in Europe,” said Mark Williams, an analyst at energy consultancy Wood Mackenzie in London. “The bigger markets are going that way, where diesel tax is increasing at a faster rate than gasoline.”

Across the EU, diesel’s average tax discount compared with gasoline has eroded by about a third since 2015, to 12.5-euro cents a liter, according to Bloomberg calculations from European Commission data. At the pump, gasoline’s average price premium across the EU has shrunk to just 3 cents a liter, the lowest since 2008, separate figures show.