Department points to biofuels as oil price solution

PETROL and diesel-dependent industries can expect few breaks in the upcoming budget, with the Department of Energy pointing to the development of the biofuels industry as the solution to the surge in oil prices.

Already, Environment Minister John Gormley has signalled he intends to penalise “gas-guzzling” domestic cars with engines of 1.6 litres upwards.

The average national petrol price is 118.8 cent per litre, while the average price for diesel is 117.3c.

The National Taxi Drivers Union and Irish Road Haulage Association have warned their industries are under huge threat from rising petrol and diesel prices while Aer Lingus increased its fuel surcharge last week. They have all said availability of biofuels isn’t widespread enough to change to 100% biofuels.

Haulage association president Jimmy Quinn said: “Hauliers are being bled to death by fuel costs and it’s been a constant battle since the first Gulf War. The Government won’t take any notice of us even though we are the most truck-dependent nation in Europe. We’re paid nothing but lip service. As I have said the competitiveness of the Irish economy is at threat as hauliers can’t afford to stay on the roads.

Last night a spokeswoman for the Department of Environment said the Programme for Government commits the Fianna Fáil/Greens coalition to the development of an Irish biofuels industry and to the development of bio-energy generally in Ireland.

“The Government has announced its intention to introduce a biofuels obligation in 2009 that will require all fuel suppliers to ensure biofuels represent a certain percentage of their annual fuel sales,” she said.

“Implementation of the obligation will require detailed consultation and development of legislation.

“Fuel suppliers will also require time to make the necessary logistical and supply adjustments to facilitate meeting their biofuels targets. The 2009 timeline reflects these requirements.”

The department ruled out any grants for the transport sector to change to eco-fuels or tax breaks to offset rising fuel costs. It is leaving it up to the market to see a spread of biofuel availability in petrol stations.

“One of the aims of the biofuels obligation is to mainstream the availability of biofuels within the existing fuel station network and provide market players with long-term certainty and a stable investment climate.

“The Irish oil industry is privatised, liberalised and deregulated. There is free entry into and out of the market. There is no price control on oil products and this is to ensure the market is fully competitive.”

It also pointed out grants for the conversion of diesel engine vehicles to use pure plant oil have also been made available by Sustainable Energy Ireland and the Department of Transport.

* Tommy Gorman, president of the National Taxi Drivers Union:

We are suffering because we can’t just increase our fares to offset increased costs. We’re tied to a meter. Rank space has been seriously reduced in this country in the past five years so taxis can’t stop and cruise around waiting for fares.

The spaces were taken so the town and city councils could use them for parking which was more profitable for them. It’s been far from profitable for us though as cruising is very heavy on fuel... To increase prices, we would have to officially apply for a subsidy from the Taxi Regulator. We’ve tried this before and it’s been turned down. Now, we’re considering looking for a blanket €1 increase to offset fuel charges.

Something has to be done to help our costs as prices are just going to rise and this is our livelihood. In the past month, we have seen a 15% increase in fuel costs.

* Enda Corneille, commercial director with Aer Lingus:

We increased our fuel surcharge on long-haul flights at the start of the month because of the recent oil trends. Flights to the US and Dubai have a charge of up to €65 depending on destination. The surcharge is being kept under review as we watch fuel prices.

The surcharge only takes up 30% of price increases we have experienced. Fuel efficiency has become a huge issue for us because of rising costs [but] we have a young fleet and the models we bought most recently are more fuel efficient such as the A350 and A330. They give up to 5% more fuel efficiency.

Our fuel consultation committee meets fortnightly and gives practical advice on how to improve fuel efficiency by loading the fleet in different ways, flying in different angles etc. There are also regular fuel management meetings where we examine hedging. This is the practice of making advance purchases of fuel for future delivery to protect against the uncertainty of anticipated rises in price.

* Oliver Lupton, director of the Irish Petrol Retailers’ Association:

It’s hitting us all over the place. An increasing number of customers pay by card and each credit or laser card involves a fixed percentage rate. When the overall cost goes up, this goes up too and further eats into our profit margins. There are also greater security costs as there is now much more cash in premises. Overall, our profitability has got a serious squeeze with margins down to 3.7% if you’re lucky. Because of the expectation that prices will rise, people are also getting more conscious of car usage. One couple I know got rid of their second car as the husband could get the train to work while his wife took the car for school runs, etc. There’s likely to be a lot more of that in the future.

* Conor Bartley, a self-employed courier:

It’s the biggest issue for me at the moment as I’m paid a set rate by the courier companies and this doesn’t rise when the price of diesel goes up.

The courier business is so competitive that you couldn’t hike your price as someone else will just take your place. It costs me up to €110 every three days to keep my van in diesel.

I have about 100 customers that I work for driving all over the northside of Cork city and north Co Cork. I started in this business in 2005 and diesel was just 70c a litre compared to about 115c now. I’d get a hybrid model in the morning if there was a van out there for me. I’ve thought about driving down to Wexford where they do biodiesel and maybe getting a tank and buying 1,000 litres in one go.

The Government really needs to give incentives to make biodiesel more available for people like myself in business.

* Jimmy Quinn of the Irish Road Haulage Association:

Hauliers are being bled to death by fuel costs. The Government won’t take any notice of us even though we are the most truck-dependent nation in Europe.

The very competitiveness of the Irish economy is at threat as hauliers can’t afford to stay on the roads with costs going through the roof. We’re paid nothing but lip service so there has been a steady trickle of small hauliers getting out of the business in the past number of years.

Our only hope is to get support from the Government, which could change the taxation regime.