Sylvie Willis
Iceland is known for its stunning landscapes, waterfalls, volcanoes, and the Northern Lights, but it is also known for its high living costs. As of July 2025, the average price of gasoline in Iceland is around ISK 304.72 per liter or USD 2.51 per liter. These prices are influenced by several factors, including Iceland's remote location, which makes importing fuel expensive, high taxes, currency exchange rates, inflation, global oil prices, retailer markups, environmental policies, and limited competition. Gas stations in Iceland are generally well-distributed along the popular Ring Road (Route 1) and in major towns and cities like Reykjavik and Akureyri. However, in remote areas such as the Westfjords or the Highlands, gas stations become sparse, so it's crucial to plan fuel stops carefully. Understanding gas prices and managing fuel expenses is essential for anyone planning a road trip in Iceland.
| Characteristics | Values |
|---|---|
| Average price of gasoline | ISK 304.72 per liter or USD 2.51 per liter |
| Average price of gasoline in the world | USD 1.21 per liter |
| Gasoline prices in Iceland compared to the rest of the world | Among the highest |
| Gasoline prices in Iceland compared to Europe | On the higher end |
| Gasoline prices in Iceland compared to North America | Higher |
| Factors contributing to high gasoline prices | Geography, taxes, economic factors, import costs, currency exchange rates, inflation, global oil prices, retailer markups, environmental policies, limited competition |
| Cheaper gas stations in Iceland | Orkan, Costco, ÓB |
| Gas stations with higher rates | Olís, N1, Atlantsolía |
| Gas stations in Iceland | Self-service, near grocery stores or in town centers |
| Gas stations on Ring Road | One approximately every 100-150 kilometers |
| Gas stations in remote areas | Sparse, fill up whenever possible |
| Gas stations in major towns and cities | Plenty, refueling is easy |
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What You'll Learn
Why are fuel costs so high in Iceland?
The cost of fuel in Iceland is influenced by a combination of geographical, economic, and taxation factors.
Firstly, Iceland's remote location in the North Atlantic makes importing fuel expensive. Iceland does not produce its own oil, so extra transportation costs, import fees, and logistical challenges are passed on to the consumer in the form of higher prices at the pump.
Secondly, fuel taxes in Iceland are relatively high, with more than half of the total gasoline price going to the state. The government has increased these fuel taxes over time to encourage a transition to electric vehicles, but this has contributed to the high prices that consumers pay.
Additionally, the value of the Icelandic króna affects import costs, and fluctuations in the local currency can impact fuel prices. Inflation and global oil price increases also contribute to rising fuel costs. Retailer markups and limited competition in the fuel importation market further drive up prices.
Environmental policies aimed at carbon reduction also play a role in fuel pricing. Furthermore, gas stations in remote regions of Iceland, such as the Westfjords or the Highlands, are sparse, and fuel prices in these areas tend to be higher.
To manage fuel costs when visiting Iceland, it is recommended to use fuel price apps, plan refueling stops, rent fuel-efficient vehicles, and utilize gas station membership cards that offer discounts.
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How do Iceland's fuel prices compare to other countries?
Iceland is known for its high fuel prices, which are among the highest in Europe and the world. As of 2025, the average price of gasoline in Iceland is around 300-305 ISK per litre (approximately $2.10-$2.51 USD per litre or $7.95 USD per gallon). In comparison, the average price of gasoline worldwide is only $1.21 USD per litre.
There are several reasons for Iceland's high fuel prices. Firstly, Iceland's remote location in the North Atlantic means that it does not produce its own oil and must import all of its fuel. This results in additional transportation costs, import fees, and logistical challenges that are passed on to consumers. Secondly, Iceland has high fuel taxes, with more than half of the total gasoline price (around 53%) going to the state. The government has also been increasing these taxes over time to encourage the use of electric vehicles. Thirdly, Iceland relies on a single fuel importer, Equinor, a Norwegian company, which limits competition and may impact pricing. Other factors influencing fuel prices in Iceland include currency exchange rates, inflation, global oil prices, retailer markups, and environmental policies.
When compared to other countries, Iceland's fuel prices are significantly higher. For example, in Norway, which also has high fuel taxes and environmental policies, fuel prices are somewhat comparable to Iceland. However, countries like Germany and France have lower fuel prices. Within Iceland itself, fuel prices can vary depending on the region. Reykjavik, for instance, tends to have lower fuel prices compared to remote areas like the Westfjords or the Highlands.
To manage fuel expenses when travelling in Iceland, it is recommended to focus on fuel efficiency, drive smartly by maintaining a steady speed and using cruise control, use gas station membership cards that offer discounts, and plan refuelling stops in advance, especially when venturing into remote areas.
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How to save money on fuel in Iceland
Fuel prices in Iceland are among the highest in Europe and the world. As of 2025, the average price of gasoline in Iceland is around $2 per litre, or $7.95 per gallon. This is due to a combination of factors, including Iceland's remote location, high taxes, and economic factors.
Research Fuel Prices and Plan Your Route
Before your trip, research the current fuel prices in Iceland and plan your route accordingly. Use apps like "Gasvaktin" or websites that track gas prices to find the cheapest fuel stations along your route. Plan your refuelling stops, especially if you're driving in remote areas like the Westfjords or the Highlands, where gas stations can be sparse. Estimate your fuel costs based on your route and the average gasoline price to set a realistic budget.
Choose a Fuel-Efficient Vehicle
Renting a fuel-efficient vehicle can significantly reduce your fuel expenses. Compact cars, hybrids, or diesel-powered engines are more fuel-efficient and can save you money. Diesel is usually cheaper than gasoline in Iceland, so consider renting a diesel vehicle if it's available.
Drive Efficiently
Maintain a steady speed, use cruise control on highways, and avoid rapid acceleration and heavy braking, as these behaviours increase fuel consumption. Driving efficiently can help you save money on fuel and make your journey smoother.
Use Self-Service Pumps and Membership Cards
Self-service pumps are normally cheaper than those with a service building and staff. Most gas stations in Iceland are self-service, and you can often find them near grocery stores or in town centres. Additionally, some gas station chains offer membership cards that provide discounts on fuel prices.
Consider Costco Membership
Costco, the wholesale retailer with branches in Europe, Asia, and North America, offers discounted fuel to its cardholders. If you already have a Costco membership, filling up at Costco stations can be a great way to save money.
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Fuel prices in Reykjavik
Fuel prices in Iceland are among the highest in Europe and the world. As of 2024, the average price of gasoline in Iceland was around 300 ISK per litre (approximately $2.10 USD per litre or $7.95 USD per gallon). In 2025, the price rose to around USD 2 per litre.
In Reykjavik, fuel prices are generally lower than in the rest of the country. Orkan, a popular gas station chain in Iceland, offers prices that are often lower than its competitors. In Reykjavik, their prices range from USD 2.10 to USD 2.30 per litre. Another budget-friendly option in Reykjavik is ÓB, which also usually charges between USD 2.10 and USD 2.30 per litre for petrol.
In contrast, N1 gas stations in Reykjavik offer some of the most expensive fuel in the country, with prices of about 397 ISK ($2.75 USD) for 95 octane.
Given the high fuel prices in Iceland, it is advisable for visitors to maximise fuel efficiency and plan their fuel stops carefully. Gas stations can be sparse in remote areas of the country, such as the Westfjords and the Highlands, so it is important to refuel whenever possible to avoid running out of gas. Additionally, apps like "Gasvaktin" can help locate the cheapest fuel stations along a route.
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Fuel prices in other parts of Iceland
Fuel prices in Iceland are among the highest in the world. As of 2024, the average price of gasoline in Iceland was around 300 ISK per liter ($2.10 USD per liter or $7.95 USD per gallon). As of March 2025, the price had risen to ISK 315 per liter ($2.25 per liter). This is much higher than the global average of $0.82 per liter. Diesel is even more expensive, costing ISK 326 per liter ($2.40 per liter), more than double the world average of $1 per liter.
There are several reasons why fuel prices in Iceland are so high. Firstly, Iceland imports all of its fuel, mostly from Norway, which incurs additional transportation costs, import fees, and logistical expenses. Secondly, fuel in Iceland is heavily taxed, with more than half of the total gasoline price going to the state. The government has been steadily increasing these taxes over the years to encourage the use of electric vehicles. Other factors influencing fuel prices include the value of the Icelandic króna, inflation, global oil prices, retailer markups, environmental policies, and limited competition in the fuel import market.
When it comes to specific regions in Iceland, fuel prices can vary. In the capital city of Reykjavik, fuel prices tend to be lower compared to other parts of the country. Gas stations in Reykjavik, such as Orkan, often offer prices between USD 2.10 to USD 2.30 per liter for petrol. ÓB stations in Reykjavik typically charge similar prices, ranging from USD 2.10 to USD 2.30 per liter. On the other hand, N1 gas stations in Reykjavik are known for their higher prices, charging approximately 397 ISK ($2.75 USD) for 95 octane fuel.
Outside of Reykjavik, fuel prices tend to increase. Akureyri, a town outside the capital, has some of the lowest fuel prices outside of Reykjavik. Along the Ring Road (Route 1), which circles the entire island, gas stations are generally well-distributed, making refueling convenient. However, in remote regions such as the Westfjords and the Highlands, gas stations become sparse, and it is crucial to plan fuel stops carefully to avoid running out of gas.
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Frequently asked questions
Fuel in Iceland is among the most expensive in the world, with an average price of USD 2.51 per liter as of July 2025.
The high prices are due to a combination of factors, including Iceland's remote location, which makes importing fuel costly, high taxes, and environmental policies.
Yes, there are a few ways to save on fuel costs in Iceland. Firstly, consider renting a fuel-efficient vehicle, such as a compact car or a hybrid. Secondly, drive smart by avoiding rapid acceleration and maintaining a steady speed to reduce fuel consumption. Additionally, look for membership or discount programs offered by gas stations, and use apps or websites to find the best fuel prices along your route.
Fuel prices in Iceland are generally consistent from region to region, except for in Reykjavík, where prices tend to be higher. It's recommended to fill up in the city before venturing into remote areas, as gas stations become sparse and prices increase.
Iceland's fuel prices are significantly higher than in many other countries, particularly when compared to North American and European prices. For context, as of July 2025, the average price of gasoline worldwide was USD 1.21 per liter, while in Iceland, it was USD 2.51 per liter.
