The Government has been playing a high-stakes game of whack-a-mole with fuel prices since the start of the crises on February 28th but it seems inevitable it will end up losing.
While the latest 10 cent cut in excise duty, which comes into effect at midnight on Tuesday, will see costs to consumers fall in the days ahead, motorists will still be much worse off by the end of this week than they were just six weeks ago.
And, if the price of crude oil continues to climb sharply as it has done since US president Donald Trump announced plans to blockade the Straits of Hormuz over the weekend, then the tax cuts to Irish consumers will quickly be wiped out.
Business on the Circle K forecourt in the Dublin suburb of Cabra was brisk on Monday morning with motorists seemingly undeterred by a price of €2.18 for a litre of diesel and €1.92 for a litre of petrol.
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The price stands in stark contrast with earlier this year.
According to the AA, the average price of petrol in February was €1.73 while a litre of diesel was priced at €1.72.
Then the war started and everything changed.
On March 3rd, Circle K – one of the biggest fuel retailers in the State – priced both petrol and diesel at €1.80 a litre. Days later the price of the fuels started to diverge, with petrol climbing by 3 cent to €1.83 and diesel going up 6 cent to €1.86.
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Just over two weeks later – and hours before the first Government cut in excise duty of between 15 and 20 cent took effect – the price of petrol jumped to €1.90, while diesel cost €2.19.
Prices fell back after the first excise cut of 15 cent for petrol and 20 cent for diesel but then they started to climb again with the last tax break having largely been wiped out.
All things being equal, the price of diesel on the Dublin 7 forecourt will fall to €2.08 this week with petrol likely to be priced at €1.82.
Even with the two excise duty cuts, petrol will cost 10 cent more per litre than it did before the war started while diesel will cost Irish motorists a fairly eye-watering 36 cent more.
Such a jump will add close to €400 to the annual cost of motor fuel for many Irish motorists and the reality is things could get a whole lot worse in spite of the State interventions.
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At the start of this week, oil prices on global markets began surging again following last week’s dip. The jump was driven by the US vow to blockade all vessels passing through the Strait of Hormuz that called at Iran ports or were headed there.
Brent Crude – widely considered the benchmark product when it comes to retail prices – rose by over 9.1 per cent to near $104 a barrel. If it jumps much further it could add between 7 and 10 cent on to the price of a litre of fuel in Ireland.
And if prices keep climbing to $150 a barrel, then petrol will cost Irish motorists €2.28 and diesel will be €2.46 – prices that include the two separate excise cuts.
It is worth noting that 10 years ago, a litre of diesel cost an average of €1.06 so even when price start to fall as this week progresses, they will still be over €1 higher than a decade ago. When spread over the course of a year that equates to an additional spend of around €1,100 by a motorist covering 17,000km, in a fairly fuel efficient car.
