The CEO of Fuels for Ireland is warning that current government policies could lead to a 35 cent per litre increase in petrol and diesel prices between now and January.
Speaking on Morning Ireland, Kevin McPartlan said the increase could happen if the Government proceeds with its current policy to reinstate the excise duty, the NORA levy from September, and approves the change in carbon tax on budget night .
There will also be a further increase to renewable transport fuel obligation on January 1, he added.
“You’re looking at adding about 35 cent per litre to the price of diesel and petrol between now and January 1, that seems crazy to me at a time when prices are very high,” Kevin McPartlan said.
“We have seen how extreme a reaction there has been to very high fuel prices in this country in the last few months, I would assume that the minister will pause on that,” he stated.
He also reiterated the need to move away from knee-jerk reactions to a more strategic approach.
Mr McPartlan said they discussed this at a meeting with the Department of Finance last week, but he described the reinstatement of excise duty as another knee-jerk response.
“You’re just responding to the price at any given time, so it would be wrong to say that we had an in-depth conversation about that,” he exlained.
Oil prices are down 6% today after the US and Iran paused fighting over the weekend.
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Brent crude is trading at around $90 a barrel after spiking to $100 on Thursday.
Crude price are up and down with the ongoing uncertainty in the Middle East.
Mr McPartlan warns that wholesale market prices are rising, not just based on crude prices which have a lag on when they hit forecourts.
“Brent crude is a really good economic indicator in normal times because fuel prices are so impactful on everything else that we buy,” he explained.
“But when things are very volatile, as they have been since the start of this conflict in the Middle East, they don’t move quickly enough because the crude that is bought today will not hit an Irish forecourt for three weeks,” he added.
He said it is important to look at the overall trend rather than daily fluctuations.
While crude is the raw ingredient, refining costs, energy costs for refining and transportation are high, shipping is limited due to impact of the blockade on the Strait of Hormuz and shipping insurance is very high.
Wholesale prices published daily on Platts indicate what the the wholesale price of petrol, diesel and home heating oil is going to be on any given time.
This flows through to the Irish market pretty much immediately, what’s bought on the international wholesale markets today, can be on a forecourt tomorrow or in a home heating oil depot tomorrow.
“What we have seen in the last two and a half weeks since the ceasefire broke down is an increase, diesel is the most indicative one, of more than 20 cent per litre, then you have to add the VAT on that before you see the impact on an Irish forecut,” said Mr McPartlan.
“That’s the game that we’re playing at the moment. It’s really, really rapidly increasing or has really rapidly increased,” he warned.
