Oil price bites at haulage companies

Small Irish firms in the transportation sector are especially likely to feel the pinch from the continuing increase in oil prices, which have reached a 10-year-high.

The average price of a litre of petrol is currently 76.8 pence, while diesel averages 67.6 pence, according to the Automobile Association. The AA estimates that petrol prices have increased by 32 per cent since January 1999, when oil prices were at their lowest, while the price of diesel has risen by 26.7 per cent in the same period.

Many small transport firms have closed over the past 18 months, according to Mr Pat Delaney, director of the Small Firms Association. He says that the sector has contracted and become more competitive during the period.

" Rising oil prices are likely to exacerbate difficulties in the sector and will only lead to more closures," he said. "It's a cut-throat market and any increase is going to have a huge impact."

The concern over rising fuel prices is especially acute among small road haulage companies, which are already finding times very difficult, according to Mr Jimmy Quinn, spokesman for the Irish Road Haulage Association.

"There is a huge cloud over the sector at the moment. Companies are having to postpone the purchase of new equipment, instead spending their money on keeping older vehicles on the road," he said.

Mr Quinn said that many IRHA members would need a 10 per cent increase in revenue to cover the costs of rising fuel prices. He spoke of a scheme in France whereby haulage companies can apply for fuel rebates. "We can all keep a lid on prices, but we can't keep a lid on costs," he said.

AA spokesman Mr Conor Faughnan, says that the Government can afford to consider cuts in fuel tax. "While not much can be done about the factors that contribute to petrol prices rises, rising oil prices and the weak euro, something could be done about taxation," he said.

It is not thought that the rise in oil prices will immediately impact on the tourism sector while sterling is still strong, but there is a risk that the pressure on overall inflation could damage the sector's prospects, according to a Bord Failte spokesman.

"Given that petrol here is cheaper, it is an advantage to us in terms of our UK visitors. But I wouldn't overstate this."

Acknowledging that Ireland is not a cheap holiday destination, Mr Brown warns that although visitors here were generally satisfied with the value for money of their holidays, according to Bord Failte, any increase on current prices, whether they would petrol prices or other costs, would be very harmful.