From 2027, the CO₂ component applied to diesel will increase 2.4 times, so just because of this decision, the price of a liter of diesel would rise by up to 10 ct.
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Additional pressure on transport costs and inflation is caused by the Hormuz conflict, the new “Via Toll” road toll system, and the upcoming application of the ETS2 directive. Meanwhile, diesel sales in Lithuania have been declining for the fifth consecutive month, so experts urge the state to review fuel taxation policy.
If the state does not change fuel taxation, a significant jump in diesel prices is expected next year. At the end of 2025, the Seimas decided not to increase the CO₂ component applied to diesel in 2026 and left it at 53.6 Eur per 1000 liters. However, its growth was stopped for only one year: from 2027, the component provided by law will reach 131 Eur per 1000 liters – thus, it will increase 2.4 times.
The CO₂ component is included in the total diesel excise rate, which will increase next year from 553.6 Eur/1000 l to 631 Eur/1000 l.
According to calculations by the Lithuanian Innovative Energy and Trade Association (LIEPA), just because of the change in the CO₂ component, the tax share in the final price of a liter of diesel will increase by about 9.4 ct/l.
“In this case, we are not talking about global oil prices or geopolitical conflicts that Lithuania cannot control, but about the tax increase programmed in our own legislation. This will make diesel more expensive, and rising transport and production costs will also increase the prices of many goods and services. We hope that the authorities, having assessed the possible negative consequences, will take measures to mitigate this price jump before 2027,” says LIEPA president Kristina Čeredničenkaitė.
Other factors will also increase fuel prices
Pressure on the transport sector’s costs and the cost of goods will increase in the coming years not only because of excise duties.
From the beginning of 2027, the new “Via Toll” road toll system will start operating in Lithuania. It will replace the currently used vignettes, and freight and some passenger transport will pay for every kilometer traveled on toll roads. The more a vehicle travels on toll roads, the larger the share of road tolls in the transport cost will be.
Moreover, from 2028, the EU emissions trading system ETS2 for the transport and building sectors will start operating in full. According to it, fuel suppliers will have to purchase emission allowances for the fuels they put on the market and cover the emitted carbon dioxide. Although the allowances will be bought by fuel suppliers, their price will become an additional part of the fuel cost and will be passed on to end consumers.
“Transport sector costs are constantly rising, but carriers cannot bear all these expenses indefinitely. When costs increase for the entire sector, they inevitably transfer to transport tariffs and ultimately to the prices of goods on store shelves,” says Linava president Erlandas Mikėnas.
Geopolitical tension also drives fuel prices up
After US forces struck Iranian missile launch facilities on Larak Island, and Iran responded with attacks on US bases in the region, oil prices rose sharply again. On August 31, Brent oil prices increased by 2.7%, and on the morning of September 1, they rose another 1.2%, reaching 91.54 US dollars per barrel.
The situation in the Strait of Hormuz is particularly worrying the market. Before the conflict, about one-fifth of the world’s oil was transported through this strategically important sea route. Currently, according to market analysts, the oil flow is about 6 million barrels per day and remains significantly lower than before the conflict.
According to data from the Lithuanian Energy Agency, from August 24 to 30, the average diesel price at gas stations in the country increased by 0.9% and reached 2.071 euros per liter. During the week, it fluctuated from 2.046 to 2.114 euros per liter. The latest oil price surge increases the risk that fuel price increases may continue.
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Fuel price increases – a blow to the economy
Rising fuel prices directly affect car drivers, but their impact is much broader – fuel is one of the most important cost components in manufacturing, agriculture, construction, logistics, and service sectors.
“The fuel price is not just a number on the gas station board. It is directly felt by drivers, and it is also included in the cost of delivering goods, food production, agriculture, construction, and many services. Therefore, rising oil and fuel prices trigger an inflation spiral – first through energy and transport prices, and later through the entire supply chain,” says K. Čeredničenkaitė.
SEB economists forecast that annual inflation in Lithuania may exceed 6% in autumn, and the average inflation in 2026 will reach 5.3 percent. A new energy price surge would further increase the inflation risk.
Diesel sales have been declining for the fifth month
Recent data from the State Tax Inspectorate (VMI) show that the decline in diesel sales in Lithuania continues: in July, 133.5 million liters of excise-taxed diesel were released to the domestic market – 9.3%, or 13.6 million liters, less than a year ago. This is the fifth consecutive month of diesel market contraction.
According to VMI data, the diesel market decline started in March and has continued for five months in a row. Compared to the corresponding month in 2025, the amount of diesel released to the Lithuanian domestic market decreased by 2.6% in March, 6% in April, 10.1% in May, 4.3% in June, and 9.3% in July.
“The current market trend is very clear: since March, diesel sales have been decreasing every month, and in July the decline again approached 10 percent. After the nearly 16% annual decline experienced in 2025, this shows that the market is not recovering, and the competitiveness problems created by fuel taxation have not disappeared,” says K. Čeredničenkaitė.
In the first seven months of 2026, the amount of gasoline released to the domestic market was 9.6% higher than a year ago. Gasoline sales grew by 3.7 percent in July alone. Gasoline is mostly purchased by private drivers, while a large part of diesel is consumed by international freight transport, which can plan where to refuel.
“For a carrier, the place of fuel purchase is determined not by state borders but by the final price per liter. If diesel is cheaper in Poland or another country, the transport company can buy a large amount of fuel there. Heavy trucks have tanks up to 1500 liters, so even a few cents difference per liter becomes significant both for a single refueling and for the entire fleet,” says E. Mikėnas.
Proposed solution – partial excise refund
Business organizations urge the state to review fuel taxation policy and consider not only environmental goals or expected tax revenues from one liter sold but also the broader impact of fuel prices on the Lithuanian economy.
One of the most important possible solutions, according to business organizations, is the partial refund of diesel excise to commercial transport. Under the proposed model, the carrier would first purchase diesel at a Lithuanian gas station at the regular price, and later, upon submitting data confirming the fuel purchase, a set part of the excise would be refunded.
The mechanism would apply to legal entities holding an EU license to transport goods and to diesel purchased for N3 class freight vehicles (weighing more than 12 tons) registered in Lithuania. Such a model would allow adjusting the refundable excise part according to the real market situation and fuel price differences in neighboring countries.
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