Irish petrol prices rising 12% faster then rest of Europe - motorists being ripped off

Government t using rising oil prices to boost its tax take

Petrol prices in Ireland are rising faster in Ireland than anywhere else in Europe because the Government and retailers are using them to rip off motorists through taxes and profit margins.

Rising international oil prices have been used by Irish suppliers as an opportunity for increasing profit margins. But the Minister for Enterprise and Employment has not lifted a finger to ensure that Irish consumers are being treated fairly in this period of oil market turmoil. The Minister’s inactivity is explained by the fact that the Government itself has been in on the act using the period of rising prices as an opportunity to step up its own tax take from the beleaguered consumer.

The Government has stepped up its tax take by 8.5c per litre on motor fuels and has been content with a more modest increase of 2.3c on home heating oil. While everyone is blaming international oil markets for the rising costs, the truth is that:

• Of the 15.5c increase in the price of petrol since 2001, only 3.5c of this is explained by the increase in international oil prices, 9c is from higher tax and 3c from higher margins



• Of the 24c increase in the price of auto diesel, only 10c of this is explained by the increase in international oil prices, 8c is from higher taxes and 6c from higher margins.

Meanwhile, the EU’s Bulletin of oil prices gives hard evidence on what has been happening in the oil market:

• The price which consumers pay for the three main oil products - petrol, auto diesel and home heating oil - have all increased faster in Ireland than in the rest of Europe, on average rising by 12 more



• Both the pre-tax element and the tax element have both been growing faster in Ireland than in the rest of Europe.

The clear inference is that wholesale and retail operators in the Irish oil market are increasing their profit margins. If we assume that margins amounted to 10c per litre in 2001, the differential price rise in Ireland would suggest that margins have since been stepped up to just short of 15c per litre. This clearly represents a dramatic 50 increase in profit taking and requires investigation.

HAULAGE SECTOR STRUGGLING

One very strong trend that is evident internationally is the way in which the price of diesel and home heating oil has moved out of line with petrol.

• The pre tax price increase of diesel has been 2.5 times the increase in petrol.



• As a motor fuel, diesel has swung from being 8% cheaper than petrol to now standing at 18% dearer. Even allowing for the traditional lower tax take on diesel, the price of the pumps of the two fuels are now almost equal.

These trends are clearly putting pressure on the haulage industry, which largely depends on diesel. Four years ago, Irish hauliers paid an average of 10c per litre less than our EU competitors. This advantage has now been whittled back to just 4c per litre, so hauliers are feeling a competitive squeeze.

Here is a test for the Government’s new pose as champion for the consumer. The following actions are immediately needed:

• An investigation of margins to see whether they have they been increased unfairly in the oil distribution business on the back of recent oil price rises.



• A cut in the Motor Tax on vehicles in the haulage sector, (which run up to €4,000 per year) in order to ease the obvious competitive pressures which the sector is suffering.



• Diversion of the windfall increase in tax revenue from oil products into a Better Fuel Use Fund which would be used to create better opportunities for consumers to avail of fuel efficient services. It could fund insulation and fuel efficient systems for the elderly, promote free off peak travel on public transport, develop Park and Ride integrated ticketing and a host of other initiatives that would give consumers better comfort and fuel efficiency.

We have a Minister who sounds like Mighty Mouse when a microphone is open in front of his mouth, but is like a church mouse when it comes to challenging the grab by the Minister for Finance and by the oil companies for a bigger slice from the consumer. Now is an opportunity for him to show that something has changed.

Please find attached a breakdown of fuel process on the following page.

Ireland                                             EU (15)
	Cent/litre April 05	% Change 01-05	Cent/litre April 05	% Change 01-05
Pre Tax Prices
Petrol	38.3	+19.8	40.0	+11.3
Auto Diesel	45.2	+53.6	45.4	+37.7
Home Heating	46.9	+45.3	38.9	+33.3
Tax Take
Petrol	61.6	+17.3	77.5	+3.1
Auto Diesel	54.0	+17.1	57.8	+10.6
Home Heating	12.2	23.6	17.6	16.0

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