I AM SITTING here writing this at Applegreen services on the Naas Road heading out of Dublin before I set off to Cork.

Diesel is €2.05. It has been a while since I’ve seen prices that high. To be exact, it is just under four years since I’ve seen prices that high, and it did get a bit worse than that back then.

We have seen worse prices – back in June 2022 the average price in Ireland was €2.13, but that was for petrol, not diesel. At this rate we will soon be seeing the highest average price for diesel fuel in Ireland ever.

Minister for Finance Simon Harris has said the government will keep everything under review in terms of intervening in the economy as a result of high energy prices caused by the Iran War.

Speaking in Brussels he said, “Something that could seem right this month could indeed turn out to be wrong next month.”

You see the thing is, there might have been a feeling, as was hoped with the war in Ukraine, that this might be all over very quickly. One would imagine Donald Trump would have thought so (and his flip-flopping on how ‘complete’ the war is currently was a sign of that).

But as of now, nobody really knows how long this conflict could last, and what the markets don’t like is uncertainty.  Speaking on RTÉ, economic expert Justin Urquhart Stewart said, “The markets dislike when they can’t see what’s happening and have no clarity and we are seeing the fog of war, and so where is the exit of this? There isn’t one and that is what markets dislike intensely. So what you are seeing is a little nervousness in the markets, and it is that vital word confidence. People can’t have confidence if they can’t see what’s happening.” 

The G7 nations have signalled they are ready to take action if global oil prices continue to rise sharply, though they have not yet agreed to release emergency reserves.

The statement came as crude oil climbed above $119 per barrel during the ongoing conflict involving the United States, Israel and Iran. French Finance Minister Roland Lescure said the group believes the situation has not yet reached the point where strategic reserves need to be deployed. However, he said G7 countries have agreed to keep all options available if markets become more unstable, including the possible release of oil from national stockpiles to help calm prices.

Some energy officials have warned that the situation could deteriorate further. Qatar’s energy minister recently suggested that if the conflict spreads and Gulf producers are forced to halt output, oil prices could rise towards $150 per barrel. Iranian officials have issued even stronger warnings, with some suggesting prices could reach $200 in an extreme scenario.

Analysts say the biggest risk lies in the Strait of Hormuz, the narrow shipping channel through which roughly one-fifth of the world’s oil and liquefied natural gas exports pass. A prolonged closure could remove as much as 20 million barrels per day from global supply, although some shipments might be rerouted through alternative routes.

Consumers are, of course, angry and upset. But before you take up your pitchforks and take it out on the poor 19-year old behind your local filling station, pause for a second. The more these prices go up, the more money the government takes in on taxes. 

At €2 per litre, the government is taking about €1.30 of that in the various taxes applied, including VAT, carbon tax, excise duty, the Nora levy and the better energy levy. Last week it was reported that they had earned €38m in VAT in the previous seven days. Back in 2022, when there were widespread accusations levelled against the fuel retailers of price gouging the consumer watchdog (the CCPC) took aim at them following the reduction in excise duty.

However, it eventually concluded the following: “The CCPC found no indication of co-ordinated pricing behaviour in the data for those stations where we received complaints.”

Most petrol station operators will tell you they earn more from coffee than fuel. I am not speaking for them – and there may well be some bad actors in the sector – but I am not sure if they are the issue here. 

As I’ve written here before, we pay amongst the highest taxes on fuel in the EU, with Ireland generally the fifth most expensive for petrol and the third for diesel. The reason for that is the level of taxes. Since the last time we faced a fuel spike like this, fuel has by default gone up around 20c per litre before anything happened due to additional taxes.

And despite the fact that EV sales have gone up, the vast majority of people in Ireland drive petrol or diesel-powered cars and the most searches for cars on DoneDeal Cars remain overwhelmingly diesel. 

What happens next depends on events thousands of kilometres away from Irish forecourts. But what can be controlled can be altered much closer to home by the government. 

Paddy Comyn is the head of automotive content and communications with DoneDeal Cars. He has been involved in the Irish motor industry for more than 25 years. 

Journal Media Ltd has shareholders in common with DoneDeal Ltd 

© TheJournal