The Government has announced a cut to the excise duty payable on petrol and diesel, a move which will see the price of fuel fall by between 15c and 20c from midnight tonight (March 9).
Amid rampant inflation, average fuel prices approaching €2 per litre and calls from the Opposition, the excise cut was signed off at an incorporeal cabinet meeting this morning with an announcement from the Ministers for Transport and Finance following shortly after.
According to the Minister for Finance, Paschal Donohoe, the move will reduce the cost of a 60-litre tank of petrol by €12 and the equivalent tank of diesel by €9, saving the average motorist around €240 per year.
The difference in cuts between petrol and diesel, sources said, is to take account the levels of excise cut allowed as part of the Diesel Rebate Scheme under EU law.
The excise cut, which is expected to run until August 31, is in response to fuel prices spiralling in recent weeks in due to Russia's invasion of Ukraine. The invasion came at a time when, because of a range of other global factors, fuel prices were already markedly high, the Government's excise cut bringing "us back to where we were two weeks ago," according to the Social Democrat TD, Róisín Shortall.
The price of green diesel, primarily used by farmers, was also reduced, though given that green diesel is already heavily discounted due to tax exemptions, the excise cut was just 2c per litre.
Not nearly enough
While the move has been broadly welcomed, both the AA and the representative body for the fuel industry, Fuels for Ireland, said that it will not be enough to counter inflation.
The AA noted that the average price of petrol had risen by more than 20c in the past three weeks alone and now represented a 44 per cent and 54 per cent increase respectively on petrol and diesel prices compared to March, 2021. This time last year petrol prices stood at around the 138.9c per litre mark; diesel cost approximately 129.8c per litre. The latest prices, according to the AA, mean that the average annual cost of running a petrol car in Ireland is now €2,500, up around 54 per cent on 2020.
Commenting on the excise cut, AA Ireland's Head of Communications, Paddy Comyn, said:
"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."
Fuels for Ireland said that in the past 24 hours alone, the wholesale cost of diesel has risen by 22c per litre. The body called on the Government to press its European counterparts to consider a reduction of the VAT on fuel, something which requires agreement at EU level.
The Taoiseach, Micheál Martin, said that the Government was, in fact, in discussion with its European partners to see if further cuts on diesel were possible.
Sinn Féin's Mary Lou McDonald called on the government to wind the price of petrol back to €1.75 per litre and to "keep it there".
Though the excise cut will be welcomed by motorists, it is expected to cost the state some €320 million in lost taxes. As yet, ministers said, there was no plans in place for rationing fuel, gas or electricity, and the Government said that it was releasing some of the country's 90-day reserve of oil to help alleviate some market pressure.