Fuel prices rise again for first time in four months

The price of petrol and diesel has crept upwards at the pumps for the first time since September, according to the latest survey of prices from the AA.

A litre of petrol now costs an average of 159.4 cent, up 1.5 cent since January. A litre of diesel costs 153.7 cent, up 2.9 cent on the figure for last month.

Prices peaked in September at more than €1.70 per litre. That was an unwelcome high-water mark and was the most expensive fuel has ever been in Ireland. Since then prices have been falling gradually and, with the relative strength of the euro against the dollar, we have seen a reduction in pump prices here.

2012 was an appalling year for fuel prices, the worst we have ever had. It remains the number one issue for motorists. This was why we were so strong in our arguments to Government not to increase fuel taxes even more in the December Budget. We succeeded in persuading them, although they did increase car tax which was frustrating.

The price of oil on world markets has been relatively stable in recent weeks. The price for Brent Crude has crept upwards from just over $110 per barrel at the start of the year to $118 now. Irish consumers did not really feel this initially because the euro crept upwards against the US dollar at the same time.

It is hard to fathom the reasons for a rise right now when you look at the international situation. Forecasts for oil demand in 2013 are quite weak, mirroring economic data, and we even had a relatively mild winter. For the price of fuel to be rising now is surprising and very disappointing.

Of course the international situation gets the attention but it is only a small part of the problem. The key reason for high prices continues to be high taxes. Fifty-five per cent of the retail price of petrol is tax in one form or another. Various tax increases since October 2008 have added 23 cent per litre to the retail price of petrol.

For a typical motorist that means paying €240 for fuel every month of which €131.50 is tax. In a year a typical Irish motorist will pay nearly €1,600 in tax on fuel.

By the way, the sharp-eyed statisticians and nerds among you may pick up that our ‘typical’ motorist is using a bit more fuel than the average. According to the Central Statistics Office the average mileage by private car is just over 10,200 per year.

That is a little false in my view because some very low mileage and relatively inactive drivers pull the number downwards. We take 12,000 miles per year (19,200 kilometres if you prefer ) as being a more meaningful example and of course lots of people do far more.

We also make an assumption that the car achieves 30 miles per gallon. Again that is a bit contrived and there are plenty of people who do better or worse. For higher mileage rural drivers the annual fuel bill could be much higher.

Still, our typical example is a reasonable benchmark to take. That sample car uses 150 litres of fuel per month, hence €240. Of course we are all hostages to what happens on taxation and what happens on pricing, and that has been a roller-coaster.

In July 2008, before the economic crisis, oil prices surged to $148 per barrel. When the world collapsed so did the oil price. It fell to $33 per barrel in January 2009. At that stage we were paying 95 cent a litre for petrol, so the monthly bill worked out at €142.50. The price has essentially been rising ever since.

One thing is certain: we cannot sustain another year like last year. The year was one long fuel crisis for consumers as the Government stayed deaf to their calls. It did not get worse in the Budget but it did not get better either. The Government will have to be more responsive this year or they will hurt ordinary motorists and they will hurt the economy.



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