Crazy fuel prices… where does your money go?

The AA wants the new Government to cut fuel taxes. This is of course to ease the burden on motorists who spend about €225 per month just to keep rolling, but it also has major effects on the broader economy. Conor Faughnan shared the couch with Eddie Hobbs on TV3’s IrelandAM this morning and explained our view. Bad as things are right now, Eddie predicts much worse to come in the future.

Conor also debated the issue with Cathal MacCoille on Morning Ireland at 0830.

When you spend €1.50 on a litre of petrol or €1.45 on a litre of Diesel, where does the money go? Click here for a breakdown of the sky-high taxes & the margins made by your service station…

Petrol :            Pump price                             €1.50*  

Excise including carbon          57.662c

Nora**                                     2c

Vat                                           26c

Total taxes:                             85.662c

Pre-tax price                           64.378c

Tax as %                                  57.12%

Diesel              Pump price                             €1.45*  

Excise including carbon          46.570c

Nora**                                     2c

Vat                                           25.165c

Total taxes                              73.735c

Pre tax price                           71.265c

Tax as %                                  50.085%

* Estimated: next AA monthly survey will issue next week

**Nora – National Oil Reserves levy…

Of the pre-tax price, how much does the garage make as profit? That is a little harder to get clear information on, but according to the Irish Petroleum Industry Association the wholesaler makes about 6 cent per litre and the retailer makes about 4.5 cent per litre. Mind you, many independent garages have complained to the AA that they actually don’t make anything like that margin.

Roughly a quarter to a third of the garages that you see actually belong to the oil company whose brand they display. The rest are usually independent small businesses. Often garages have to discount their margin somewhat either for competitive reasons or because they have to match price promises made by the brand.

Busier service stations might sell maybe 50,000 litres of fuel per week between unleaded and diesel. At 4.5 cent per litre, that’s €2,250 per week. Not great as a gross profit, and small wonder that in most cases the business model relies on motorists buying items in the convenience store as part of the transaction.

Vast fortunes are made from oil, no doubt about it, but they are not being made by the garage at the end of the food chain.

ENDS

One comment

  1. It seems to me if the tax was lowered we would use more fuel and in the long run more would be gained for the exchequer

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