The cost of driving home for Christmas is on the rise for motorists as the average price of a litre of petrol rose by 1c and diesel by 1.3c in the last month according to the latest AA Fuel Price Index.
The AA’s analysis shows that the average price of a litre of petrol now sits at 131.4c per litre with a litre of diesel costing an average of 121. Petrol now costs 10.3c per litre more than this year’s low of 121.1c seen in March, while the average price of a litre of diesel has increased by over 15c compared to the 2016 low of 105.4c per litre in February.
“Coming into the Christmas period the latest increase is another piece of bad news for motorists. While the month-on-month increase may not appear too significant, it certainly appears that the dip in fuel prices seen earlier this year has come to an end and based off the current trend it may be quite some time before we see prices drop again.”
Unfortunately for motorists, with prices climbing for the third successive month, more bad news may be on the way as further. Within the last month the price of a barrel of oil has increased by almost $10.00 and following an OPEC agreement to temporarily reduce oil production further increases may be on the way. A weaker Euro also counts against motorists in Ireland.
“We can be confident about short term trends in fuel prices because we know the key factors – the oil price, the dollar vs euro exchange rate and European wholesale prices. Unfortunately all of those indicators are currently pointing in the wrong direction for motorists so the signs are not good. Whether that trend continues as we get into 2017 is something we don’t know but prior years tell us to expect volatility.”
“Ultimately while we have little control over the international events and agreements which impact on oil prices, one thing that is within Irish control is the extent to which petrol and diesel are taxed,” Faughnan added. “Emergency taxes added to the cost of petrol and diesel during the worst years of the recession have never been removed. While the emergency has come to an end the era of emergency taxes goes on, the removal of these taxes would save the average motorist approximately €400 per year.
Fuel taxes in Ireland are charged by the litre so when the price falls the taxes do not.1 Starting with the emergency budget of October 2008 there were five separate tax increases on fuel between 2008 and 2012 adding about 20 cent and 18 cent to a litre of petrol and diesel respectively. However, despite improvements in the Irish economy these emergency tax increases have remained, with The AA warning that this is an anti-stimulus measure which effectively takes money out of the pockets of motorists.
The effect is that 85 cent of the price paid for a litre of petrol is tax and 72 cent of the price of diesel is tax.
With the AA Fuel Card AA Customers and Members can save 4c on every litre of fuel bought at Topaz garages across the country. Find out more here. Already an AA member? Don’t forget that the fastest way to report a breakdown is through the AA app.
1 Apart from VAT at 23% which is charged on top of Excise Duty & Carbon tax.