Move to cut fuel costs welcome but will not be enough, says AA

The Government’s move to cut the cost of motor fuel to consumers by 15-20 cent per litre has been welcomed although volatility on global markets and further price increases on forecourts in the weeks ahead will minimise its positive impact, it has been warned.

A 20 cent reduction in excise duty will save the average motorist €240 a year but the AA said it would not be enough to spare motorists the worst impact of record fuel prices.

Petrol and diesel prices in Ireland are at the highest level on record with the current average just short of €2 per litre.

This time last year prices stood at €138.9 cents per litre for petrol and €129.8 cents per litre for diesel which means there has been an average increase of 44 per cent for petrol in the past year and a 54 per cent increase for diesel.

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The increases spread over 12 months would see the average motorist spending €2,500 on keeping their car on the road compared with €1,500 in 2020.

"While we welcome any measure to reduce the price of petrol and diesel, and the assurance that this will remain in place until the end of August, this is unlikely to see us avoid further record petrol and diesel prices in the short term as the price of a barrel of oil continues to increase and wholesale prices for petrol and diesel increase accordingly," said AA Ireland's head of communications, Paddy Comyn.

Fuels For Ireland, the representative body for the fuel industry, also welcomed the excise cut while echoing the AA’s concerns that it would not go far enough.

“We are all concerned at the scale of price increases, and the impact that this is having on individuals and businesses across the country,” said FFI chief executive Kevin McPartlan.

“However, we are concerned that these reductions won’t do enough,” he said. “For instance, diesel rose by 22 cent on wholesale markets in the last 24 hours alone, yet today’s excise cut ultimately won’t even counter that.”

‘Second challenge’

He said a “second challenge” would be the delay in forecourts passing on the decreases which were due to come into effect from midnight on Wednesday. “Many of our members will be expected to immediately pass on these lower prices when the excise reduction is announced this evening, but for stocks already purchased, the excise has already been paid at the higher rate. There will need to be some form of rebate mechanism here in order for the reductions to be passed on immediately.”

He also pointed to a challenge around VAT. “The Government are saying that they are going to deliberate along with their European partners and decide on this matter next week. We need to impress on them the urgency of this situation and the need to bring about price certainty as soon as possible.”

The Coach Tourism and Transport Council of Ireland, meanwhile, said the measures “address the symptom, not the cause” and “fall far short of what is needed to address soaring inflation”.