Paul Hosford: Unwinding fuel supports may prove difficult 

Excise on petrol will fall by 15c per litre, with diesel excise cut by 20c. File picture

Temporary. Targeted. Sensible.

Had you been paying attention to the Government's announcement of fuel supports, you will have heard the hits. This isn't a giveaway. This isn't throwing open the family store. This is a measured, responsible, and temperate measure.

The Government reacted on Tuesday to runaway prices at the petrol pumps with a suite of measures.

To recap: excise on petrol will fall by 15c per litre, with diesel excise cut by 20c.

The Nora levy, a levy put on petrol and diesel to fund Ireland's strategic oil reserve, will be reduced from 2c to zero next week once legislation is passed, bringing the total reduction in levies on petrol and diesel to 17c and 22c respectively.

After three weeks of holding fire, the Government was pressed into action as the prices at the pumps climbed well north of €2 per litre, as the public became strangely au fait with the happenings in the Strait of Hormuz and the fluctuations of oil pricing economics.

The underlying cause of the increase is, of course, the US and Israeli war with Iran, which has spread across the Persian Gulf and has impacted oil supplies through the strait, which Iran said over the weekend would be “completely closed” immediately if America follows up on a threat from US president Donald Trump to attack its power plants. 

Mr Trump would later pull back from the threat, saying the US would hold off striking Iranian power plants for five more days to allow US envoys to hold talks with a “respected” Iranian leader.

However, Iranian officials said that the American leader had backed down “following Iran’s firm warning”, which highlights the problem with Mr Trump's war and more or less any military endeavour. Mr Trump is discovering that it is very easy to start a war, but you don't always get to decide when you end one.

US president Donald Trump is discovering that it is very easy to start a war, but you don't always get to decide when you end one. File picture: Niall Carson

The Government in Ireland faces a similar problem. It is very easy to begin a package of supports; it's a lot harder politically to unwind them. While government sources were of the belief that the announcement would avoid "banana skins", the obvious one lurks a few weeks away.

The measures are forecast to cost the exchequer somewhere around €250m, but expire at the end of May.

That timeframe would be more than enough respite for motorists and hauliers, but only if there is a cessation of fighting and production and shipping of oil returns to normal. In that best-case scenario, the Government will have bought time for a return to some normality, and the unwinding of supports for motorists and hauliers will be simply a case of taking away subsidised prices and would be publicly more palatable.

But in the alternate scenario — and with fighting showing no sign of ending — the Government has said that prices are too high for consumers and will find it difficult to find the political off-ramp. 

At a cost of €250m for six weeks, the Government is thankful to be working with a surplus this year, but the headroom is finite. Keeping supports going indefinitely is not an option, and government sources have been keen to stress that the public cannot be fully shielded from the negative impacts of the war. The political manoeuvring out of supports will be difficult to unwind, even in the face of opposition criticism that they don't go far enough.

Stressing that the supports are temporary is all well and good, but if consumers find themselves under the pump come June, the public may feel that the intervention is anything but sensible.

• Paul Hosford is Acting Political Editor.