Don’t tell me fuel prices are climbing again are they?
Unfortunately they are. After a period of relative calm and falling prices on forecourts across Ireland, the resumption of hostilities between the US and Iran has spooked global oil markets and that has had the knock-on impact of driving prices for Irish motorists higher.
Where are we now with oil prices then?
The situation is fluid, as you might expect. Before the war in the Middle East started, the price of a barrel of Brent Crude – widely considered the global benchmark for wholesale oil prices – was around $70 a barrel. In the immediate aftermath of the conflict starting at the end of February, prices jumped sharply. The price of a barrel of Brent topped $120 at some points. When the framework deal was signed by the US and Iran, prices fell to less than $72 a barrel but as of Friday morning, they had climbed back to just over $76 a barrel.
What does this mean for Irish motorists?
It is not good news, that is for sure. The Convenience Stores and Newsagents Association (CSNA) and the Fuels for Ireland umbrella group have warned the wholesale price of diesel being delivered to forecourts on Thursday was as much as 10 cent more than the price earlier in the week, while the wholesale price of petrol has climbed by 2 cent a litre. The increases will inevitably hit prices and could see the cost of a litre of diesel climb considerably over the weekend.
What are we talking?
It depends on where you are in the country and what forecourt you are using. According to figures from the AA, the average cost of petrol across Ireland in June was €1.84 while it put the price of diesel at €1.88 per litre. However, real time data from the website fuelwatch.ie suggests by early July, prices had fallen back to closer to €1.70 per litre for both petrol and diesel. That fall was largely as a result of the tentative deal being reached by the US and Iran but with that deal falling apart, prices have jumped sharply in recent days.
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But how much more will I be paying?
Based on what the CSNA and Fuels for Ireland are saying, Irish motorists can expect to pay around €1.80 for a litre of diesel by the end of the weekend and probably more than that in some places. Petrol prices will most likely be nudging €1.75 on many forecourts.
That’s not as bad as it was when the war started I suppose?
It is arguably worse. While consumers might be paying €1.80 a litre, that price does not take into account tax cuts. A more accurate price comparison between July and January – when fuel averaged around €1.70 a litre – has to factor in the reductions in excise duty that the Government introduced in response to the first phase of the fuel crisis.
[ Fuel excise: You can’t continue writing a cheque every month, says MinisterOpens in new window ]
What were the tax cuts again?
How quickly we forget. In April, the excise duty on diesel was lowered by 32 cent while the duty was cut on petrol by 27 cent on a litre of petrol. Had there been no cuts, then, the price of a litre of diesel would be €2.12 while a litre of petrol would cost around €2.
And what can we expect in the coming weeks?
Well, we know the excise cuts will remain in place for the coming weeks with the plan being to phase them out in stages from the autumn. Or at least we should say that was the plan before the war in the Middle East restarted driving oil prices on global markets higher. Right now it is probably too early to say what the Government will do in response.
And away from tax cuts what can we expect?
More broadly, the “key issue now is not whether prices have risen, but whether the current geopolitical uncertainty keeps wholesale markets elevated,” says Kevin McPartlan, the chief executive of Fuels for Ireland. He told The Irish Times that “events like this also underline why Ireland needs an Expert Group to examine the cumulative impact of taxation and policy costs on fuel prices, so we develop a long-term, evidence-based framework instead of relying on short-term responses to every international crisis.”
Dare I ask about home heating oil?
In the middle of a heatwave, there won’t be many people thinking about home heating oil but as we all know the warm weather won’t last forever and it won’t be long before we start worrying about how to keep warm rather than keep cool. The trend in the home heating oil market is also upwards, although things are nowhere near as bad as they were at the height of the crisis in the springtime. In the middle of June, 1,000 litres of home heating oil was averaging around €1,350, as much as €500 less than it was in early April. Prices declined steadily in June and the early days of this month but that downward trend has been reversed. On July 7th, 1,000 litres of domestic fuel cost around €1,150 but that had climbed to €1,200 as of the end of this week.
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