Fuel prices likely to increase as soon as next month, experts warn

With supply restrictions likely to increase prices, February will also see the government to end a reduction on duty on petrol and diesel. 

Average fuel prices which have stabilised since the new year are likely to increase as soon as next month, experts have warned.

According to AA Ireland, the average petrol price across the state is now €1.61, a 0.6% increase from December 2022. Similarly, the average price of Diesel dropped slightly in January, falling by 1.7% to €1.71.

However, the steadying of prices following a turbulent 2022 comes ahead of an EU-wide ban on the importation of Russian oil products which comes into effect on February 5th. 

With supply restrictions likely to increase prices, February will also see the government move to end its reduction on duty on petrol and diesel. 

The proposed cessation of the excise duty will increase fuel prices by 15 cents per litre for diesel and 20 cents per litre for petrol.

Before it invaded Ukraine, Russia was Europe's largest external fuel supplier, and the continent has continued to buy in significant volumes up to the cutoff. 

Speaking on the ban, AA Ireland's Head of Communications, Paddy Comyn said, "Europe has been raising its diesel imports from Asia and the Middle East; the two regions are now expected to shoulder most of its exports after the ban comes into place. 

"The longer freight distances, however, and higher demand for tankers shipping the fuel into Europe have meant that freight rates are rising, potentially adding to the cost for consumers at the pumps. In the short term, there's a risk of higher prices."

AA Ireland has also called for the excise duty to remain in place increase to avoid difficulties at fuel stations.

"Suddenly switching off the excise duty reductions overnight will inevitably lead to anxiety leading up to the end of February, which could lead to tailbacks filling stations or pumps running dry in certain areas. 

"A more prudent approach would be to stagger this over two to three months. There remains uncertainty on Russian oil products, particularly diesel, so a staggered reduction in duty could offer a buffer to any potential increases," adds Comyn.