AA urges politicians to solve 'mystery' of diesel prices

MOTORING LOBBY group AA Ireland has called on the Government and the European Commission to investigate the rising cost of diesel.

The cost of the fuel rose by almost 8 cent a litre in April alone, to a record level, according to figures released by the AA yesterday.

The unprecedented cost is hitting hauliers as well as ordinary motorists who are increasingly turning to diesel as a more environmentally friendly option.

From July 1st, VRT and road tax will be based on a vehicle’s carbon emissions rather than its engine size. More fuel-efficient cars, particularly diesel models, are likely to see a fall in price, while large, petrol-engined vehicles are likely to rise in price.

Diesel cars represent 27 per cent of overall sales, but these are expected to be closer to 50 per cent by 2009, when the full effect of the new tax regime will be seen. Larger petrol engines are likely to suffer under the new regime.

Yesterday’s data show that the average price of a litre of diesel is 132.4 cent, up 7.8 cent since last month’s survey. A litre of petrol costs an average of 124.9 cent, up by 3.8 cent since April. Diesel was 108.5 cent a litre in May 2007, while petrol was 115.9 cent.

Diesel prices have almost doubled since May 2001, when a litre cost 74.9 cent, and they have risen significantly more than petrol, which was 87.6 cent a litre seven years ago. Ireland is the second most expensive eurozone country for diesel, but is one of the cheapest of the 12 countries for petrol. Diesel prices, traditionally lower than petrol, overtook petrol prices in December and have remained higher since then.

“The rise in diesel prices is phenomenal,” said AA public affairs manager Conor Faughnan. “We have never seen prices rise so fast or reach so high. It is having a major impact on diesel motorists and also on the cost of haulage and the costs for many businesses.”

He said he was “open to the possibility” that oil companies were artificially inflating prices as motorists switch to diesel vehicles.

“We can understand oil prices pushing up the cost of fuel, but that does not explain why diesel is affected so much worse than petrol,” Mr Faughnan said. Prices have risen right across Europe without any satisfactory explanation, according to Mr Faughnan.

Labour’s spokeswoman on energy Liz McManus backed the calls for action. “It is remarkable that there is no mechanism in place to deal with this,” she said. “I believe it is time to look at providing a petrol commissioner, as has happened in Australia.”

Meanwhile, the Irish Road Haulage Association yesterday wrote to Taoiseach Brian Cowen seeking urgent action on the fuel costs issue. The group’s president Jimmy Quinn said: “Fuel usage and taxation is one of the main challenges facing our economy today and we must bring some fresh thinking to bear on this subject as quickly as possible.”