Government is one of the 'big winners' from spike in fuel prices
Ottoline Spearman
The Government is benefiting from rising fuel prices as global oil costs surge amid the conflict in the Middle East, it has been claimed.
Speaking on Newstalk, The Irish Times Consumer Affairs Correspondent Conor Pope said that the Government is one of the "big winners" from the spike in fuel prices, as a large share of the price paid by the consumer goes directly to the Exchequer through taxes.
"Every time diesel, petrol and home heating oil goes up, the percentage or the amount of money that the Government makes from each litre sold increases."
Around 40 to 50 per cent of fuel cost in Ireland is made up of taxes and levies, which include excise tax and National Oil Reserves Agency (NORA) tax.
Pope said that this means it is within the Government's reach to cut some of the tax if it chooses to intervene.
Fuel industry representatives have also said the increase is also boosting State revenues.
Chief executive of Fuels for Ireland Kevin McPartlan told Newstalk that when motorists pay €2 per litre for fuel, more than €1.20 goes to the Government.
“Last week the Government made an extra €38 million in tax because VAT is a percentage of the price paid. When prices increase, the tax take increases,” he said.
As of Monday, a barrel of Brent crude has climbed above $100 (€98) for the first time since 2022, rising by around 25 per cent since Friday.
The spike has pushed up the price of petrol, diesel and home heating oil. Heating oil now averages around €881 on Monday, up from €503 a week ago.
Diesel is now exceeding €2 per litre at some forecourts, which, according to Pope, marks a " psychologically important" line that has been crossed.
Meanwhile, concerns are growing about the potential knock-on effects for petrol, heating and food bills.
Energy suppliers say the increase in oil prices is also pushing up electricity costs because gas-fired power plants set much of the electricity price in Ireland.
SSE Airtricity managing director Stephen Gallagher said wholesale electricity prices have already risen.
“Oil prices have clearly gone up. Gas prices have lifted on the back of that, and gas actually sets the majority of the price of our electricity in the market,” he said.
“Our hedging does protect customers to a degree, but it’s a volatile market.”
The Tánaiste has said that support for households dealing with higher energy costs is under review.
Speaking at a meeting of Eurogroup finance ministers in Brussels, Simon Harris said any decisions on measures to assist consumers would have to be taken carefully.
"We do need to get a better understanding in the days ahead as to the likely various economic impacts of a conflict that goes on for a few short weeks, which the Commission have today said could have a benign economic effect versus one that goes on for a prolonged period of time," he said.
"We need to be very careful that the economic medicine that may be administered is the correct prescription."
Minister for Public Expenditure Patrick O’Donovan has also said Ireland is particularly exposed to global oil shocks because it imports almost all of its fuel.
