Are we back to talking about fuel prices?
Unfortunately, we are. That is because of yet another spike in the cost of oil on global markets, which has been fuelled by the ongoing conflict in the Middle East and by the apparent inability of the United States and Iran to reach any kind of long-term agreement that would stabilise things.
Higher prices are nothing to do with what is happening closer to home, right?
Hmm, we wouldn’t say that exactly, and Government moves coming down the tracks will affect prices or forecourts sooner rather than later.
What are we talking about regarding higher prices?
The cost of petrol or diesel depends on where you are buying and when, but the news is not good anywhere countrywide. According to figures published by AA Ireland last week, the price of a litre of diesel jumped by 19 cent to an average of €1.92 over the last month. The price of a litre of petrol climbed by nine cent to €1.84 over the same period.
Those prices are not as bad as in the spring, right?
No, but within a couple of weeks things may get considerably worse as a result of a nasty cocktail of Government tax increases and – as seems almost certain – volatility on global markets.
RM Block
What do you mean tax hikes?
Well, one person’s tax hike is another’s partial restatement of an existing tax. As you may remember last April, as the fuel crisis spiralled, the Government introduced tax cuts on fuel. The reductions amounted to a 32 cent cut on the price of a litre of diesel and 27 cent on a litre of petrol.
What difference did that make?
Had the Government not introduced what it said at the time were temporary cuts, motorists would be paying €2.24 for diesel and slightly less for petrol. All told, the move saved a motorist who fills up a diesel car twice a month about €150.
Is the era of State-funded largesse ending?
Not completely, but the plan is to start increasing the tax on motor fuel again from the beginning of September. When that timetable was announced several months ago, the hope was that the conflict in the Middle East would be resolved by now. At times over the course of the summer months, that looked like a safe bet, but it has not happened. As a result, the first of the scheduled tax increases is just days away.
What will that mean to me?
Should the plan the Government set out earlier in the summer proceed, motorists can expect a 9 cent increase to a litre of petrol and a 10 cent increase to a litre of diesel on September 1st. That will be coupled with a reintroduction of a 2 cent levy on fuel to fund the National Oil Reserve Agency. It means the cost of a tank of diesel will increase by €6, with a litre of diesel, based on current pump prices, rising to €2.04.
Any chance of a delay?
There have certainly been calls for that, but one difficulty is that the Dáil is not sitting right now, so the avenues for holding off on the hike are restricted. In the longer-term, the Government might have no option but to hold off on its plans for further increases.
Is it just motorists paying the higher prices?
No. At the start of the Middle East crisis, the cost of home heating oil soared, with 500 litres going from less than €500 to more than €800. A 500-litre fill costs about €650 at the moment and that means the cost of heating many homes this winter climbs considerably when compared with this time last year.
Is that it?
No. We’ve seen price increases from many electricity and gas companies already as a consequence of the Middle East conflict. And we are likely to see more in the weeks ahead, with many Irish households likely to be worse off by well over €300 a year.
