The Government will need to keep some “firepower” in reserve so the State can intervene to shield people from the worst effects of any longer-term jump in fuel and energy costs this winter, Taoiseach Micheál Martin has said.
The energy crisis created by the Iran war was probably “more severe” than the economically damaging oil shocks of the 1970s, he said.
While ruling out a price cap on fuel, Martin said advice that might be issued to the public about conserving energy was being kept under review.
The decision by the United States and Israel to strike Iran, and the resulting shock to global oil and gas supplies, has put European governments under pressure to do something about surging energy costs.
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“No one is quite certain as to when or where this will end or what’s going to unfold over the next number of weeks,” Martin said.
“We were very conscious that this could go on, no one is quite certain of what is around the corner, so we have to be cautious in terms of how we intervene,” he said.
Separately, there was “no evidence that any military planes going to Iran are refuelling in Shannon”, Martin said.
Spain this week closed its airspace to US planes involved in the Iran war and Italy reportedly denied Washington permission to land aircraft carrying weapons in a Sicily airbase, moves that may further frustrate US president Donald Trump.
“Shannon [Airport] is not used as a base for the Middle East war,” Martin said when asked on Tuesday. “That’s not happening,” he said.
Iran has responded to US and Israeli attacks by effectively shutting off the Strait of Hormuz, a narrow passage through which about a fifth of the world’s supply of oil and natural gas is shipped.
The continuing blockade, and military strikes damaging oil and gas production facilities in the Gulf, has rocked global energy markets, leading to fears the war will cause a prolonged economic crunch.
The Government last week cut taxes on petrol and diesel in an effort to curb surging costs at the pump and extended a State fuel allowance that supports 470,000 households.
European capitals have been cautious in how they respond to calls for stronger state intervention, wary the shock may only be the start of a long lasting crisis that could see inflation shoot up dramatically.
“We’ve got to protect the broader economy. We’ve got to make sure we have enough firepower left in terms of the budget and next winter, so there’s a lot to play for yet,” the Taoiseach said.
Martin was speaking in Warsaw after meeting Poland’s prime minister Donald Tusk, who earlier that day had introduced a cap on the price of fuel.
“We’re not going to go the price cap route,” the Fianna Fáil leader said when asked would Ireland consider similar measures.
“We [introduced] probably one of the largest, if not the largest, relief package last week,” he said.
The war in the Middle East was “causing too much death and destruction” and needed to end, Martin said. It was also leading to huge economic disruption “with very serious consequences”, he said.
Russia’s invasion of Ukraine in early 2022 similarly saw the price of oil and fuel skyrocket, pushing up inflation to record levels and triggering a cost-of-living crisis in Ireland and other European countries.
In response to huge hikes in utility bills the previous coalition government rolled out a system of energy credits to insulate households from a portion of the increased heating and electricity costs.
