Ameer Randolph
Iceland is known for its stunning landscapes and road trips are a popular way to explore the country. However, fuel prices in Iceland are among the highest in the world, and this is something travellers need to be aware of when planning a trip. As of March 2025, the average price of gasoline in Iceland was around 311.37 ISK per litre, which equates to roughly $2.36 per litre or $8.93 per gallon. Diesel prices are even higher, with an average price of around 323.96 ISK per litre, or $2.46 per litre. This is more than double the world average of $1 per litre. With fuel costs adding up quickly, it's important for travellers to consider their vehicle options and plan their routes carefully to keep costs down.
| Characteristics | Values |
|---|---|
| Average price of gasoline in Iceland | 311.37 ISK per liter, €2.19 or $2.36, which equates to roughly $8.93 per gallon |
| Average price of diesel in Iceland | 323.96 ISK per liter, 2.27€/liter or $2.46/liter |
| Gasoline prices in Iceland vs. global average | Much higher than the global average of $0.82 per liter |
| Diesel prices in Iceland vs. global average | More than double the world average of $1 per liter |
| Cheapest gas station in Iceland | Costco |
| Most expensive gas station in Iceland | N1 |
| Gasoline prices in Iceland | Uniform due to government regulations and taxes, with slight variations depending on the region and supplier |
| Diesel prices in Iceland | Generally cheaper than gasoline, but prices fluctuate |
| Fuel costs in Iceland | Add up quickly due to high taxes, fuel importation costs, and environmental policies |
| Recommended vehicle type for Iceland | Fuel-efficient and compact rental car |
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What You'll Learn
Diesel is more expensive than regular fuel in Iceland
Iceland is known for having some of the highest fuel prices in the world, and diesel is no exception. As of March 2025, the average price of diesel in Iceland was around 323.96 ISK per liter, equivalent to roughly 2.27€/liter or 2.46$/liter. This is significantly higher than the global average of $1 per liter.
There are several reasons for the high cost of diesel in Iceland. Firstly, Iceland imports all of its fuel, mainly from Norway, as the country lacks oil refineries. The cost of importing fuel is significant, and this is passed on to consumers in the form of higher prices at the pump.
Additionally, diesel prices in Iceland have been increasing due to factors such as local taxes and the global oil market. The Icelandic government imposes high taxes on diesel and gasoline to encourage a switch to more eco-friendly alternatives and to compensate for the environmental impact of driving. These taxes have been steadily increasing over the years, contributing to the high cost of diesel.
The location of the gas station also plays a role in diesel prices. Gas stations in remote regions of Iceland tend to charge higher fees due to the logistical challenges of transporting fuel to these areas. For example, gas stations in Reykjavik and other major cities may offer more competitive prices compared to those in less populated areas.
It's worth noting that diesel models are often cheaper to run than their gasoline counterparts, so renting a diesel car in Iceland may still be a cost-effective option, especially for longer trips. However, it's important to consider the gas mileage of the specific vehicle when making a decision.
To save money on fuel in Iceland, it's recommended to opt for a fuel-efficient vehicle, plan your route efficiently, and adopt smart driving habits such as maintaining a steady and slower pace to improve fuel efficiency. Additionally, using a fuel card or taking advantage of discounts offered by rental companies or the Camping Card can help keep costs down.
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Gas prices vary across the country
Gas prices vary across Iceland due to several factors. Firstly, the type of gas station and its location influence prices. Gas stations in remote regions with less population, such as the Westfjords or the Central Highlands, tend to charge higher fees due to the higher costs of transportation and supply. In contrast, urban areas like Reykjavik and Akureyri may offer more competitive prices due to increased competition between suppliers.
Secondly, gas prices in Iceland are affected by the fact that the country imports all its fuel, mainly from Norway, incurring importation costs. The value of the Icelandic króna also impacts importation costs, influencing the retail price of fuel.
Thirdly, gas prices are subject to local taxes, which make up a significant portion of the total gasoline price. These taxes are meant to encourage the use of electric vehicles and reduce carbon emissions.
Finally, gas prices can fluctuate over time, influenced by the global oil market and the season. For example, the colder months tend to result in higher gas consumption and, consequently, higher prices.
It is worth noting that, despite the variations in gas prices across Iceland, the overall fuel prices in the country are among the highest globally, influenced by factors such as geography, taxes, and economic factors.
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Fuel costs are high due to taxes
Fuel costs in Iceland are high due to a combination of factors, including geography, taxes, and economic factors. Iceland is a remote country and an island, which contributes to higher fuel import costs. The country has no domestic fossil fuel resources and relies entirely on imports, making it vulnerable to fluctuations in the global oil market.
However, one of the most significant factors contributing to high fuel costs in Iceland is taxes. The Icelandic government imposes significant taxes on gasoline and diesel, which make up a substantial portion of the total fuel price. These taxes are meant to encourage a shift towards more eco-friendly alternatives and to compensate for the environmental impact of driving in Iceland's delicate ecosystem. As a result, more than half of what consumers pay at the pump goes to the state, with taxes continuously being raised over the years.
The high taxes on fuel in Iceland are part of the country's environmental policies and efforts to reduce carbon emissions. By making gasoline and diesel more expensive, the government aims to incentivize the use of electric vehicles and more fuel-efficient options. This strategy has proven effective, with electric vehicles gaining popularity, especially in urban areas like Reykjavik.
While the push for eco-friendly alternatives is essential, the high fuel taxes can significantly impact travel expenses for both locals and tourists. To minimize costs, travelers are advised to opt for fuel-efficient vehicles, plan their routes efficiently, and take advantage of prepaid gas cards and fuel discount apps.
Additionally, fuel prices in Iceland can vary depending on the region and supplier. Gas stations in remote areas, such as the Highlands, tend to charge higher prices due to the higher costs of transportation and supply. On the other hand, urban areas like Reykjavik often offer more competitive prices due to increased competition between suppliers.
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Gas stations charge different prices
Gas stations in Iceland charge different prices for fuel. This is because they are all privately owned commercial businesses. The average price of gas in Iceland is 316 ISK per liter, which is approximately $2.30 or €2.20. However, prices can vary depending on the brand of the gas station. For instance, Olis, one of the oldest gas providers in the country, charges an average of 285 ISK per liter, which is approximately $2.05 or €2.00. In contrast, N1, a "high-end" gas station known for its excellent customer service and amenities, charges an average of 325 ISK per liter, or about $2.35 or €2.17. Another factor that affects gas prices in Iceland is location. Gas stations in remote areas tend to charge higher fees due to the logistical challenges of transporting fuel to these regions. For example, gas stations in Reykjavik and other major cities may offer more competitive prices compared to those in less populated regions like the Westfjords or the Central Highlands.
The high cost of fuel in Iceland can be attributed to several factors, including geography, taxes, and economic factors. Iceland imports all of its fuel, mainly from Norway, as the country has no oil refineries. The value of the Icelandic króna also impacts fuel costs, as it affects the import price. Additionally, the government imposes significant taxes on gasoline and diesel to encourage the use of eco-friendly alternatives and to compensate for the environmental impact of driving in Iceland's delicate ecosystem. These taxes make up a significant portion of the total gasoline price, and they have been steadily increasing over the years.
To save money on fuel in Iceland, it is recommended to rent a fuel-efficient vehicle and plan fuel stops strategically. Choosing a smaller, compact car with better fuel consumption can significantly reduce fuel costs. Additionally, using a fuel card or taking advantage of digital payment methods such as Apple Pay or Google Wallet can help streamline the fueling process and potentially lead to cost savings.
When it comes to diesel prices in Iceland, there has been some fluctuation. As of March 2025, diesel prices were higher than gasoline prices. The average price for a liter of diesel was around 326 ISK, or $2.40, which was more than double the world average. However, in a separate source from September 2023, diesel was reported to be cheaper than petrol in Iceland, with an average price of just over 300 ISK per liter, or about $2.24. It's important to note that diesel prices can vary over time due to changes in the global oil market and local factors.
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A fuel-efficient vehicle will save you money
Fuel costs in Iceland are among the highest in the world. The country imports all of its fuel, and high taxes and environmental policies aimed at reducing carbon emissions further increase prices. Gasoline and diesel prices in Iceland are currently around $2.36 and $2.46 per liter, respectively.
Given these high fuel costs, choosing a fuel-efficient vehicle for your trip to Iceland can help you save money. A small, fuel-efficient rental car, such as the Toyota Aygo, will be more economical than a larger vehicle with poor fuel efficiency. If you're sticking to cities or towns, a smaller hybrid vehicle may be a good option, as it gets better mileage in city driving and is easier to park. If you're heading off paved roads, a diesel 4x4 vehicle may be a more efficient choice.
When renting a car in Iceland, keep in mind that fuel prices can vary depending on the region and supplier. Gas prices in remote areas tend to be higher due to higher transportation and supply costs. Urban areas like Reykjavik may offer more competitive prices due to increased competition between suppliers. Additionally, look for cost-saving options such as fuel cards or membership cards at specific gas stations, which can provide discounts.
If you're considering purchasing a new vehicle, a fuel-efficient car can also offer significant savings over time. Electric vehicles (EVs) and hybrids tend to be more expensive upfront but can provide substantial fuel savings, especially with government credits and incentives. However, it's important to consider depreciation, as trading in your current vehicle too soon may offset potential fuel savings. Use online calculators to estimate the potential savings and determine if it aligns with your financial goals.
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Frequently asked questions
As of March 2025, diesel is more expensive than regular fuel in Iceland. The average price of diesel is around 324 ISK (about $2.46) per liter, while gasoline is around 311 ISK (about $2.36) per liter. However, diesel vehicles tend to be more fuel-efficient, so you may end up saving money by choosing a diesel car.
Iceland has some of the highest fuel prices in the world due to a combination of factors, including high taxes, fuel importation costs, and environmental policies aimed at reducing carbon emissions. More than half of the total gasoline price goes to the state, and these taxes are raised frequently.
Here are some tips to save money on fuel in Iceland:
- Choose a fuel-efficient vehicle. Compact cars with good fuel economy will help you save on gas.
- Plan your route. Fuel consumption varies depending on the roads you take. Main roads will be more fuel-efficient than gravel roads.
- Drive at a steady and slower pace. Maintaining a speed of 50 kilometers per hour or below can save up to 25% on fuel consumption.
- Look for discounts. Ask your rental agent about deals with local gas stations, or get a Camping Card for cheap camping and fuel discounts.
- Consider an electric vehicle. Electric chargers are becoming more common in Iceland, and some rental companies offer free charging.
