‘You could see €4 a litre for diesel by the end of the year,’ warns expert

High fuel prices have already led to a free public transport policy being introduced in Australia to encourage people to switch from private vehicles. Picture: Nick Ansell/PA Wire

Diesel could reach €4 a litre by the end of the year, with oil prices potentially not returning to pre-war levels until 2027 and gas prices until 2028, experts say.

The Government cannot protect against market increases in fuel prices indefinitely, Dr Oliver Browne, lecturer in accounting in University College Cork’s Business School, said.

Measures like rationing and free public transport may have to be considered if prices continue to soar, he said.

High fuel prices have already led to a free public transport policy being introduced in Australia to encourage people to switch from private vehicles.

A recent industry report estimated that if the Middle East war and current geopolitical tensions continue, the cost of a barrel of oil could surge to $200 to $250, Mr Browne said.

“That's a 150% increase over what it is today. It's about $96 today. The highest it was in living and recent memory is [during the invasion of] Ukraine. It was about $125 for a while.

“At the very start of the [war on] Iran, it was $115 for a couple of days. Most of the oil that's been bought now in the refining facilities is around $100 a barrel."

Empty forecourt - No fuel available....Nationwide fuel protests and the blockading of Irving Oil at Whitegate, Co Cork has resulted in fuel shortages on the forecourts across Ireland. OUT OF STOCK notice from Circle K on the petrol and diesel pumps at Marina Filling Station, Monahan Road, Cork. Picture: Larry Cummins

He said doubling the price of oil is going to cause a doubling of the price of fuel.

“So you could see €4 a litre for diesel by the end of the year.” 

Future markets, where people are buying oil at a point in the future, currently indicate that prices will likely return to the ‘normal’ pre-war level of $70 a barrel in mid to late 2027 and early 2028 for gas, because of damage to infrastructure in the Gulf.

“So we’re looking at these prices for a prolonged period due to the disruption that has been caused globally,” Mr Browne said.

“If we see even another 10% increase in the price of oil, you could see that translating into significant inflation. 

"So if we saw a doubling, you'd see enormous inflation.” 

Ironically, US president Donald Trump may be seen as the great green innovator of the century, because he has underlined how dependent the world is on oil and oil prices, Mr Browne said.

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"It's highlighted that we are too dependent on importing energy as a country where we could generate a significant amount of our energy internally. 

"It has highlighted that the businesses that are at least risk are those that have made sustainable transitions, invested in renewable energies or renewable fleets."

Ireland’s next budget will probably see a doubling in home heating allowances due to a doubling in the cost of fuel which some people will be unable to pay, he said.

The Government’s recent €505m support package , lowering excise on fuel and introducing further supports for heavily fuel dependent sectors like road hauliers and agriculture, was a "somewhat knee-jerk [reaction] to the whims of the sector" he said.

“It's up to a business to find its way to be profitable, not for the Government to make you a profitable business through policy. 

"If costs are rising, businesses have to find ways to pass them on."

Ireland has been “lured into a reactionary process where the Government will step in and say, 'OK, we need to help here.' 

"But the Government has more pressing problems."

Criticism of the Government’s perceived lack of action when the war in Iran broke out is unfair, as its length and impact could not have been foreseen with any accuracy, he said.

And after you’ve dropped prices, putting them back up is always “incredibly difficult”, he said.

But the €750m in fuel support packages the Government has now committed to may be less than that, because as fuel prices rise, so will the Government tax take on those fuel sales, he said. 

And infrastructure damaged throughout the war may take between six months and five years to repair, after hostilities have ceased, Mr Browne said. 

"Prepare for a long ride of serious costs," Mr Browne said. 

"Oil and gas prices are going to be maintained at a high rate for a prolonged period."

Meanwhile, Anthony Kelleher, one of the main protesters at Whitegate delivered half a truck load of food and drinks donated to the protesters to Cathriona Twomey, former boss of Cork Penny Dinners, to distribute to Cork’s hungry and homeless.

He said the Government's €505m package was insufficient and the protests would not stop.

People are really struggling, he said.

Another Whitegate protester said that they feel "very disappointed and left down."

"Something is better then nothing," he said.

"But the way diesel prices are going, it mightn't be much good to us. They've offered a 20c rebate that we can claim back.. that will be a help alright as long as they don't make it absolutely impossible with paper work to claim it back."