Ireland faces 'emerging energy affordability crisis' as war in Iran continues

Fuel prices in Bantry on Monday. There are now fears that prices at the pump could reach or surpass the levels seen in the wake of the Russian invasion of Ukraine in 2022, which saw diesel peak at €2.09 per litre and petrol at €2.15.

The Irish economy is facing an energy affordability crisis as households and businesses face soaring fuel bills as the war in Iran drags on.

US president Donald Trump yesterday predicted the war in the Middle East could be over soon, even as Iran’s hardliners staged a show of loyalty to Ayatollah Mojtaba Khamenei in a sign that it was not prepared to back down any time soon.

The price of oil soared past the key $100 a barrel mark yesterday. The conflict has already seen a sharp rise in the price of home heating oil across Ireland.

Motorists are now seeing the price of a litre of diesel hitting €2 in many filling stations, rising from an average of €1.72 just a few weeks ago.

There are now fears that prices at the pump could reach or surpass the levels seen in the wake of the Russian invasion of Ukraine in 2022, which saw diesel peak at €2.09 per litre and petrol at €2.15.

Irish hauliers had threatened to mount rolling protests, blocking key roads and airports in the coming days, saying their industry faces collapse. They called off a planned protest that was due to take place in Dublin on Tuesday.

The Irish Road Haulage Association said the situation in the Middle East has highlighted Ireland’s “dysfunctional market for fuel, where the Government is taking over 65% of the price of a litre of petrol and over 60% of the price of a litre of diesel”.

Hauliers want a temporary suspension of the carbon tax and a removal of the M50 toll for all motorists. Association president Ger Hyland said hauliers feel just as let down as farmers, builders, and the public.

Ibec warned the Government that it needs to take “urgent steps to mitigate an emerging energy affordability crisis”.

Ibec executive director Fergal O’Brien said the recent and rapid surge in global oil prices has again exposed the vulnerability of the Irish economy.

“Irish households and businesses remain acutely exposed to international fossil fuel volatility,” he said.

“These increases will lead to significant indirect inflationary pressure across the wider economy, particularly in manufacturing sectors.”

Government sources have played down the prospect of energy credits or a cut in excise duty, but sources on Monday accepted that, if the US and Israel’s bombardment of Iran and Iran’s retaliation on Gulf states continue, some measures may have to be looked at.

However, sources warned that similar supports were not made available until at least a month into the Ukraine war, adding that they were made in a “different economic context”.

'The war is complete, pretty much'

The conflicting signals from Washington and Tehran sent markets on a rollercoaster, with oil prices surging and stock markets nosediving before swinging in the other direction after Mr Trump’s comments and reports of a possible easing of sanctions on Russian energy.

Mr Khamenei, a 56-year-old Shi’ite cleric with a power base among the security forces and their vast business empire, has been declared unacceptable by Mr Trump, who has demanded Iran’s unconditional surrender.

Mr Trump told NBC News that Iran’s leaders made a “big mistake” by elevating Mr Khamenei, but he predicted the war could be over before the timeline of four to five weeks he had earlier laid out.

“I think the war is very complete, pretty much,” he told CBS News.

However, Iran’s military said it would step up its missile strikes. Politicians and institutions issued pledges of loyalty to the new supreme leader whose wife, son, and mother also died at the start of the US-Israeli air onslaught, according to Iranian state media.

“We will obey the commander-in-chief until the last drop of our blood,” said an Iranian defence council statement.

Additional reporting: Reuters

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