The price of a litre of petrol has fallen slightly at the pumps in the last month but diesel prices rose according to the November survey of pump prices from the AA. A litre of petrol now costs an average of 149.5 cent, down 0.7 cent since October. Diesel rose by 1.8 cent and now costs an average of 144.7.
The changes are slight and there is no sign yet of a significant fall in oil prices. Although concerns with the euro pushed the price of oil below $110 a barrel in late October, jittery stock markets have sent the price back up $5 in recent days. Consequently, any chance of a sustained drop in pump prices has been stifled by market volatility.
In effect the European motorist is paying a high price for the distorting effect of the Eurozone crisis on the markets.
“There is no problem currently with oil supply and it is hard to see a rational reason for the price of Brent Crude to be up at around $113 per barrel but that is what is happening.” Says Director of Policy Conor Faughnan. “It seems correlated with concerns about the Eurozone crisis. A bit like the high price of gold, there is money out there that is seeking safer investments in commodities. That pushes oil prices up beyond what the normal effect of supply and demand would lead you to expect.”
While oil prices should in theory affect both of the main fuels equally diesel has become relatively more expensive in the last month.
“We do normally expect diesel prices to increase relative to petrol at this time of the year.” Says Faughnan. “That’s a seasonal factor in that demand for home heating oil increases during the northern hemisphere winter. Having said that, it is a bit of a surprise because Europe has not seen any severe weather yet. The Germans are the biggest users of diesel and home heating oil and their winter like our own has been mild so far. In that context it does seem strange for the diesel price to be rising but it undoubtedly is right across the continent.”
The AA is urging the government not to increase the price of fuel in next month’s budget despite the temptation.
“Fuel is a basic component in the cost of living and the cost of doing business in our economy.” Says Faughnan. “The last government raised fuel taxes four times in two and a half years*, which has added 20.2 cent to petrol and 16.9 cent to diesel.”
*Including Carbon tax of 4.2 cent per litre on petrol, 4.9 cent on diesel from December 2009
“That did significant damage to disposable incomes and to business costs. It also reduced the amount of fuel used and narrowed the gap between prices in the Republic and prices in Northern Ireland making it something of an own goal.”
The AA is asking its Members and all motorists to share their concerns about prices and report any issues they come across via its website blog section, http://blog.aaireland.ie/
Note: The AA’s Fuel Saving Tips.
Full details of the AA fuel price survey for May along with previous months for comparison are available on the Association’s website at http://www.aaireland.ie/AA/Motoring-advice/Petrol-Prices.aspx .