Increased air travel and ‘green’ cars blamed for high diesel costs

THE increasing popularity of air travel and policies to encourage the sale of “greener” cars are being blamed for high diesel prices.

The price of diesel overtook that of petrol on the forecourts last year and is retailing at about 10c more per litre throughout the country.

While petrol and diesel prices have slowly fallen in recent days — down from an average of 133.5c a litre (petrol) and 143.8c a litre (diesel) in July to 129.9c and 139.9c respectively this week — consumers fear that the drop in worldwide crude oil costs is not being reflected in their local service stations.

Consumers’ Association of Ireland chief executive Dermott Jewell urged motorists to ask retailers when petrol and diesel prices would be significantly cut.

“The industry should be challenged to be more pro-active in explaining when the price will come down,” said Mr Jewell.

“They should give us a guideline, and a date. It’s very much like the banking world, where if there’s a hike in the interest rate, the full interest is applied to the borrowing so your mortgage goes up and your loan goes up, but you don’t get the benefit in your savings. When will we get the full benefit of the drop in oil prices?”

The Irish Petroleum Industry Association said that diesel has gone beyond petrol in its cost per litre because of the demand for aviation fuel — which comes from the same part of crude oil as diesel — and the increased use of diesel cars.

“Because the demand for diesel has risen much faster than petrol, diesel has gone up in price faster,” said an association spokesman.

Commentators should not look at crude oil as the basis for comparing prices, but the refined oil coming into the country, he said, and its different components such as petrol and diesel.

“While the long-term trend in the price of crude oil has generally had an effect on the price of refined products, there is no strict correlation.”

Government policies throughout the EU have been to encourage the use of diesel cars as they produce “cleaner” emissions than their petrol equivalents.

However, this, along with greater demand for aviation fuel, has served to push up the price, and keep it up for longer.

While the Irish Petroleum Industry Association cannot comment on future price predictions, the spokesperson said that “people should be aware” of the factors affecting the price of diesel.

He also referred to the impact of taxes such as excise duty on the price of petrol and diesel in Ireland.

Fuel costs breakdown

*JANUARY: Price of crude oil — $88.35 a barrel.

Average price of petrol — 118.9c a litre.

Average price of diesel — 119.6c a litre.

* JULY: Record highest oil price — $147 a barrel.

Average price of petrol— 133.5c a litre.

Average price of diesel — 143.8c a litre.

* YESTERDAY: Crude oil price — $120 a barrel.

Average price of petrol — 129.9c a litre.

Average price of diesel — 139.9c a litre.