No help for households if petrol prices keep soaring

Extra.ie​

6 hours ago

Taoiseach Micheál Martin has downplayed the prospect of new cost-of-living measures in the Budget as fears grow over a spike in petrol prices and inflation as a result of the conflict in Iran.
Two supertankers U-turned in the Strait of Hormuz on Monday amid fears Iran could disrupt the global oil trade by closing the passage in response to US strikes.
The crisis could send oil prices spiralling depending on which way the situation plays out, a leading economist warned. Crude prices on Monday had jumped more than $10 a barrel to almost $72 since early May – up more than 16% in little over a month. Taoiseach Micheál Martin has downplayed the prospect of new cost-of-living measures in the Budget. Pic: Leah Farrell/RollingNews.ie
The crisis has already added around 9c to a litre of petrol and 8c to diesel at the pumps, sending petrol prices to almost 180c a litre and diesel to around 174c. Kevin McPartlan, chief executive of Fuels for Ireland (FFI), said fuel prices 'are rising sharply across Ireland, not due to domestic policy decisions, but because of escalating global tensions and energy market volatility'.
He said: 'Even before the US launched its latest actions in Iran, wholesale prices had already surged by 9c per litre for petrol, 8c for diesel and 7c for kerosene. Those are wholesale prices, before VAT, excise duty, or any retailer margin is applied.'
The Government has already ruled out cost-of-living measures such as energy credits in the October Budget. The Taoiseach on Monday signalled the Government is not minded to change course, despite the situation in the Middle East. Fears are growing over a spike in petrol prices and inflation as a result of the conflict in Iran. Pic: Shutterstock
He said: 'We have identified housing, disability and child poverty as key priorities of the Budget, and these are issues that I'm certainly wedded to, but also doing it in a core budgetary manner.
'The challenge with once-off [payments] is it wouldn't be core or long term or sustained. The closure of the Strait of Hormuz would be very, very serious globally, although it would damage everybody, including Iran.
'It may not happen because of that very reason that it's mutually destructive to everybody. The crisis could send oil prices spiralling depending on which way the situation plays out, a leading economist warned. Pic: Shutterstock
'That is why we do need to return to the diplomatic table… Because that is the danger with a war of this kind, that it can continue and it can lead to other acts which will ultimately be damaging to humankind.'
It was unclear what caused the two empty ships to head south, away from the mouth of the Persian Gulf. The Strait of Hormuz is a Gulf pinch point and means tankers must sail close to Iranian waters but the Iranian parliament was reported to have backed a move to close the Strait, threatening around a fifth of all global oil movements. The closure would threaten shipments from Persian Gulf countries, likely further spiking prices.
Ireland imports 100% of its fuel and is vulnerable to any movements in oil prices.
'Approximately 20% of the world's oil passes through the Strait of Hormuz, a strategic choke-point now at risk,' Mr McPartlan said. The crisis has already added around 9c to a litre of petrol and 8c to diesel at the pumps, sending petrol prices to almost 180c a litre and diesel to around 174c. Pic: Shutterstock
'Fuel retailers in Ireland are not setting prices arbitrarily. When fuel prices go up, so does the State's tax take automatically. This underlines the urgent need for a comprehensive review of how fuel for heating and transport is taxed. We are calling on the Minister for Finance to establish a group of experts to undertake this review as a matter of urgency.'
Irish Petrol Retailers Association (IPRA) spokesman David Blevings said 'the real fear is an escalation of violence that could see refineries targeted or supply lines hit that would have an impact on global supply lines'.
Economist Austin Hughes said: 'We do know which way it's going to go, but we don't know how far it's going to go.
'It's very difficult to see a scenario in which risk profiles don't push energy prices higher into the autumn and winter… Unless it becomes abundantly clear the strike at the weekend was the final act…' As Iran does not have a 'squadron of bombers ready to retaliate' there will probably be 'some sort of terrorist attack or other disruption', he warned. Oil prices jumped more than 4% early yesterday and Dutch and British wholesale gas prices also rose.