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RTÉ News
28-06-2025
- Automotive
- RTÉ News
How are fluctuating oil prices affecting motorists at the pumps?
Motorists are feeling the pinch at the pumps this month, as both petrol and diesel prices are rising. While the month-on-month changes are relatively minor, they still add financial pressure especially for those commuting regularly and long-distance drivers. Several factors are driving these price hikes including rising global oil costs, domestic tax policies, and the seasonal surge in summer travel. Electric Vehicle (EV) charging prices, however, remain stable, continuing to offer a reliable alternative. Higher when the price of oil goes up it can directly increase the cost of producing electricity. And in Ireland, many power plants rely on oil and gas to generate electricity. According to AA Ireland's figures, fuel prices in Ireland have been steadily climbing in recent months, with petrol costing €1.80 per litre and diesel costing €1.77 per litre during the months of February, March and April. A fuel price drop in May saw petrol down to an average of €1.76 per litre, down 4 cents, while diesel fell to an average of €1.68 per litre, down 9 cents. But this month saw increases creeping up again with petrol now costing an average of €1.77 per litre, up 1 cent since May and diesel has risen to an average of €1.69 per litre, up 1 cent month-on-month. Wholesale oil prices have been fluctuating wildly in recent months, particularly in June when the Israel-Iran conflict broke out. Global benchmark Brent futures went from a high of $75.47 a barrel on April 2 to a four-year low of $58.40 on April 9. It saw another low on May 5 but since then Brent has been trending higher, reaching $70.40 a barrel on June 12, the day before Israel launched its bombing campaign against Iran. The Israeli attacks and the subsequent US bombings saw crude spike to a five-month high of $81.40 a barrel on June 23, before the risk premium evaporated with a ceasefire deal announced by US President Donald Trump. Oil prices rose on Friday (June 27) though they were set for their steepest weekly decline since March 2023, as the absence of significant supply disruption from the Iran-Israel conflict saw any risk premium evaporate. The cost of petrol, diesel and home heating are increasing here as fuel retailers in Ireland are responding to international costs that are outside their control. Industry group Fuels for Ireland, the representative body for the liquid fuels sector, is warning that recent increases are putting renewed pressure on households and businesses. CEO of Fuels for Ireland, Kevin McPartlan warns how fuel is taxed is a matter for national policy. "When fuel prices go up, so does the State's tax take automatically, that may be fiscally efficient, but it can be economically and socially regressive," said Mr McPartlan. "This underlines the urgent need for a comprehensive review of how fuel for heating and transport is taxed." How is the price at the pump formed? The price of petrol and diesel is a combination of global and local factors. Crude oil is the main driver which is then influenced by costs such as refining and distribution, taxes, and retailer margins. In Ireland fuel taxes include excise duty, carbon tax and VAT, this means if you take AA Ireland's price for petrol in June of €1.77 per litre, then more than one euro is going to the government due to these levies. Brent crude prices are constantly shifting, when a refiner buys crude oil at a certain price on a certain day, they must refine it and transport it onwards. So as an input cost into the pump prices, there is a lag of about two weeks on crude prices when you see the trend where Brent goes up and down, and when the pump price is up and down. Exchange rate fluctuations can also affect the price in local currencies as refined fuels are often sold in US dollars. Crude price two weeks ago at the start of the Israel Iran conflict were going up, and that impact is still being felt now. But wholesale prices have flattened again as the ceasefire is seeing prices decline and are expected to stabilise. "What you would hope and expect now is pump prices have begun to fall already and over the next couple of days that fall will continue as people get new deliveries in," said Mr McPartlin. "They'll have bought at a lower wholesale price, and it seems to have levelled out, or there hasn't been any dramatic change in the last 24 hours (Friday 27)". What is Brent crude? Brent crude is a specific type of light, sweet crude oil which can be easily refined into petrol and diesel. The price of Brent crude is a major benchmark for the purchase of oil worldwide, so it can influence the price of other crude oils and refined products worldwide. It is the benchmark used for the light oil market in Europe, Africa, and the Middle East. Higher energy costs can make many goods more expensive across the world. Ireland imports 100% of its fuel needs and is therefore fully exposed to global markets. What are can motorists expect for the coming months? It is impossible to say. No one could have predicted the US bombing Iran, the ensuing ceasefire, the doubts over the ceasefire and the wild excesses it would cause on wholesale prices. But traders always factor risk into the market, whenever there is any uncertainty the wholesale prices go up straight away. Markets are reacting to risk, not just reality, with the speculative effect driving up prices, even in the absence of supply shortages. In Ireland even If all the storage tanks were completely full, they would hold around enough fuel for 10 days, but not all tanks are full at any one time. There is a reliance on ship deliveries and stocks are constantly running down. "It's never the case that people are sitting on high levels of stocks, we run on a just in time delivery basis throughout the supply chain," said Mr McPartlan. He is cautiously optimistic that the fear or concern the important shipping route The Strait of Hormuz would be closed is diminishing, and if that continues then wholesale markets will reflect that in prices. However, this expectation of some kind of stability for now is no indication of what could lie ahead. "To suggest what's going to happen weeks from now in a market which is really very dynamic would be foolish in the extreme," said Mr McPartlan. What could be done to ease costs for consumers? Fuels for Ireland said Irish motorists pay more tax on fuel than any other EU Member State, and Ireland has a higher dependency on oil than all but one of them. They are calling on the Minister for Finance Paschal Donohoe to establish a group of experts to review how fuel for heating and transport is taxed. "Price volatility is largely and overwhelmingly a result of global events over which we have very little influence," said Mr McPartlan "The one thing that we do have control over in this country is the taxation." Fuels for Ireland is proposing the group would include representatives from the fuel industry, environmental experts, economists, consumer groups including different demographics and people from rural areas. The aim, according to Mr McPartlan, is to achieve shared objectives of making sure the state gets a fair return on tax from fuels, that renewable and sustainable options are supported and that they don't make it unaffordable for people. "We think that all of those different interest groups, all the stakeholders could buy into that as a model for a conversation, we're hoping the Minister will do that and that he will make some changes in time for budget 2026." Mr McPartlan said the Minister has agreed to meet with them, and they are waiting to set a date.
Irish Independent
17-06-2025
- Business
- Irish Independent
Fears conflict in the Middle East will send petrol, diesel and home-heating oil prices soaring
Petrol and diesel prices have been rising for days, and there has also been a surge in the cost of home-heating oil. The price of 1,000 litres of heating oil has risen by €25 in the past few days, with energy experts expecting more hikes. Brent crude is up by 8pc since the first strikes on Iran last Friday, and was up by 13pc at one stage. This has raised fears of even higher increases in the price of petrol, diesel and heating oil. Late on Saturday, Iran said Israel struck a key fuel depot, while an oil refinery in the capital, Tehran, was also in flames. Wholesale costs for petrol were up 4c a litre in the past week, with diesel up 3c Iran has also partially suspended production at the world's biggest gasfield, the South Pars, after an Israeli strike caused a fire there. Adding to the uncertainty, Iran said it was considering closing the Strait of Hormuz amid the intensifying conflict with Israel. Such a move would send oil prices soaring. Petrol and diesel prices are already up in the past few days, according to Kevin McPartlan of Fuels for Ireland, which represents the major petrol retailers. He said wholesale costs for petrol were up 4c a litre in the past week, with diesel up by 3c. Industry sources expect prices at the pumps to keep rising because of the conflict in the Middle East. ADVERTISEMENT Mr McPartlan said: 'The various different factors that impact on petrol and diesel prices are all going in the wrong direction.' He denied his members were 'ripping off the public' by quickly increasing prices and failing to drop them when crude had fallen earlier this year. He said profit margins were thin on the sale of petrol and diesel, and what he described as dynamic pricing meant wholesale prices were reflected quickly in what would be charged by petrol retailers. Prices charged by forecourt operators reflect the wholesale price when the ship containing the refined petrol and diesel leaves port, with most fuel coming to Ireland from Wales. 1,000 litres of heating oil is €900, nearly 10pc less than this time last year Mr McPartlan said some petrol retailers would take deliveries several times a day. Michael Toner, of home-heating oil price comparison site said his site had recorded strong rises in prices. 'We're seeing a big jump in heating oil prices in just a couple of days of over €25 for 1,000 litres and we're expecting that to increase further,' he said. 'This is undoubtedly as a result of conflict in the Middle East between Israel and Iran.' The price of 1,000 litres is now averaging €900, 'which is still nearly 10pc less than it was this time last year, but we are fully expecting that gap to narrow', Mr Toner said. Energy expert Dr Paul Deane, of University College Cork, said there had been a jump in EU wholesale gas prices in the past few days, but it had been modest in relation to past price increases. However, of concern is the potential closure threat to the Strait of Hormuz, a shipping route for nearly 20pc of global liquid natural gas (LNG) trade. If this were to happen, it would increase prices, but the magnitude would really depend on the duration, Dr Deane said.
