The warnings emerged during the summer; with the re-introduction of the last of the Cost Of Living Crisis cuts in fuel duty, the Irish Government would have brought fuel taxes back to where they were before interest rates and inflation spiralled out of control.
Most expensive fuel in Europe?
Which in and of itself would have caused a rise in the price of a litre of petrol or diesel at the pumps, but the warnings coming from Fuels for Ireland (FFI), the group that represents Irish fuel importers and retailers at Government level, have it that Ireland will shortly be the most expensive country in Europe to buy a litre of fuel.
According to FFI’s Kevin McPartlan, it’s all down to the automatic increase in carbon taxes baked into the Budget. “The planned carbon tax increase will catapult Ireland to the top of the EU's fuel price rankings, making us the most expensive country in Europe for diesel and one of the highest for petrol. For many years, we’ve urged the Government to take meaningful steps by establishing an expert group to review fuel taxation. The relentless rise in fuel prices is not just unsustainable for consumers but counterproductive. Our recent survey confirms that 80 per cent of motorists agree with the need for an urgent review” said McPartlan. “It’s clear that current taxation policies are not driving the shift to electric vehicles, as originally intended. Instead, they disproportionately burden those who can least afford it. The Government must understand that this is not about pro-environmental policy—it’s about fiscal pressure. Without adequate support for consumers and a balanced approach to taxation, we risk pushing more people into financial hardship.”
Carbon tax hikes
According to FFI, the extra carbon taxes will push the price of fuel to significantly higher levels, making Ireland the most expensive country in Europe in which to fuel your car. FFI’s figures show that according to the EU’s Weekly Oil Bulletin published by the European Commission (dated September 9th), Ireland's current diesel price is €1,667.20 per 1,000 litres, which is above the Euro Area average of €1,554.61 per 1,000 litres. For context, diesel prices in Denmark are €1,597.51, in Sweden €1,477.35, and currently the highest in Europe is in Finland at €1,683.00. After the planned carbon tax increase next month, Ireland is expected to rise from 2nd to 1st place for diesel prices in Europe.
Prices actually falling at pumps
However, the warnings don’t necessarily chime with what’s happening at the pumps right now. According to AA Ireland, the average price of fuel in Ireland has fallen by 7c in the past month. The AA’s research shows that petrol prices dropped by 7 cents to €1.74 per litre, while diesel prices also dropped by 7 cents to an average of €1.67 per litre. Crude oil prices continue to fall at $72 per barrel. Just by way of comparison, the cost of running an electric vehicle has also fallen, and owners can expect to pay an average of €857.77 per year to cover the national average of 17,000 km per year, which is a reduction of €58 per year this month.
Jennifer Kilduff, Head of Marketing & PR for the AA (Ireland), said, “It’s a good month for all motorists this September. Petrol and diesel prices on average have decreased this month, perhaps as a result of crude oil prices falling. The EV driver is also winning this month with the average monthly charging costs reducing. Further reductions are expected from November 1st with Electric Ireland announcing they will be cutting some of their rates. Hopefully, these small wins will not be offset by any budget measures.”
If the carbon tax increase goes through in the budget as expected - and there’s no evidence to suggest that it won’t - then Ireland will have some of the highest taxes on fuel in Europe. Ireland’s total tax level on petrol will be 57.2 per cent - the third highest overall - and on diesel will be 54 per cent - joint highest with Malta.
There are also concerns from FFI that continuing low fuel prices in Northern Ireland - where in some stations petrol currently costs as little as the Sterling equivalent of €1.51 per litre (although don’t forget you’ll be hit with currency exchange costs on each transaction) will adversely affect fuel retailers in border counties.
Nonetheless, if prices at Irish pumps are actually coming down, is there any reason to panic?
UPDATE:
CompleteCar spoke to Kevin McPartlan today, and put it to him that with prices at the pump actually reducing, there was no need to be issuing dire warnings to Irish consumers about taxation on fuel.
Mr McPartlan’s response was: “It matters because I don’t think that the Government should be taking more tax than they ought to. The Carbon Tax is the one that I have the least issue with, but it’s the re-instatement of the excise duty — which the UK government decided not to do — and the fact that the Renewable Transport Fuel Obligation cost also goes up in January. So you might well look at the Carbon Tax increase in the Budget and think that 2c per litre isn’t a big difference, and it’s not, but when you combine it with the excise duty and the RTFO cost increase, you’re looking at more like 9c per litre overall.
“Equally, by the end of Budget day, Ireland will be charging 60 per cent tax on petrol, from a position just a few years ago where we were charging 45 per cent tax of a much lover overall price. It’s also worth remembering that all of these fuel-specific taxes, including the NORA levy (National Oil Reserves Agency) are are also linked to a VAT charge, and it’s because of that VAT that up to August the Irish Government was already collecting more tax from fuel than it has ever done before.”