Oil prices – Motorists face threat of further hikes

Just as the annual inflation rate dipped under the eurozone average for the first time in five years, it was ambushed by a hike in petrol and diesel prices, which will have a seriously adverse effect on the economy.

The first place the impact of the new pricing regime will be felt is at the forecourt, where petrol is about to hit the €1 per litre mark very soon.

That will inevitably happen after the country's largest independent oil company, Maxol, with undue alacrity, raised its petrol and diesel prices by 3.25 cent per litre. While motorists may not be too interested in the mechanisms of international oil price fixing consequent on fears of lower supplies, the reality will quickly become all too evident at the pumps.

The new prices will, no doubt, be matched by other suppliers, with a consequent impact on various services and commodities across the economy.

That burden will be carried by the unfortunate consumer as usual and the beneficiaries will be the oil companies and the Government.

It is a fact that while the consumers immediately feel the effect of an upward trend in the cost of petrol and diesel, the opposite never happens on the occasion when the international cost is adjusted downwards.

As petrol heads to the €1 a litre mark, it may not be the end of increases, because economists fear more hikes if global demand does not stabilise soon.