Fuel duty ‘ceiling’ call as businesses feel pinch

By Pádraig Hoare

A fuel duty ceiling should be introduced to counteract soaring petrol and diesel costs, fuel retailers have said — while a hauliers’ body has warned of a resurgence in fuel laundering.

Consumers have felt the rise in oil prices at the pumps in recent weeks, but business is also feeling the pinch, according to the Irish Petrol Retailers Association (IPRA) and the Irish Road Haulage Association (IRHA).

According to AA Ireland, the average price of a litre of petrol yesterday was just under €1.48, while a litre of diesel was almost €1.38. The consumer organisation said a retailer’s margin was 4 cent on average per litre, while wholesalers saw 8c.

This month’s average cost of a litre of petrol is the highest since November 2015, when prices were just short of €1.49.

The peak was reached in September 2013 when a litre of petrol cost €1.70, according to AA Ireland’s records.

IPRA spokesman David Blevings said the US withdrawal from the Iran nuclear deal has caused crude oil prices to increase to over $77, a figure last seen at the tail end of 2014.

“Unfortunately the instability and concern around the Trump decision to withdraw from this deal has made traders nervous and is adding a premium to crude oil prices. In turn this is increasing the cost of wholesale fuel costs which has to be borne by retailers.

“We have seen an increase in local terms and this is unwelcome news for consumers and retailers who have no choice but to pass on increased costs.

Remember almost 60% of the pump price is taken by the Government in duty/Vat and carbon tax and is out of the retailers’ or, indeed, wholesalers’ control. We would advocate that the Government should have a ceiling price at which fuel duty is reduced when prices increase to assist consumers and businesses alike, said Mr Blevings.

The fuel retailer body foresee a return to lower prices by the end of the year, due to a calming of political tensions and US shale production becoming more viable, said Mr Blevings.

“We would be confident that prices will return to a more normal level by the end of the year”, he said.

President of the IRHA, Verona Murphy, said profit margins were so tight that hauliers had no choice but to pass on costs to customers.

She said hauliers needed “recognised status”, along the lines of farmers.

She reiterated the organisation’s call for increased rebates on fuel, saying the sector was looking to the Government to act at the Budget.

“It is a struggle and there are businesses out there that are only hanging on. We are the backbone, and everything goes in a truck.

Yes, we are a commercial enterprise but if you take farmers, and if the price of beef was fluctuating, the Government would do something to stabilise the cost for the consumer. We can’t be expected to absorb it, so we have to charge accordingly, said Ms Murphy.

She said there is now a major concern that the fuel laundering market would be reignited.

“If the Government was savvy enough, and increased the fuel rebate, then the laundering would not be viable. But as it stands, there is nothing there to stop it and I believe it will start up again.”

Investec chief economist Philip O’Sullivan said the firm’s latest services purchasing managers index (PMI) showed input costs continued to rise sharply, with panelists noting higher fuel prices among other costs.

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