Impact on Irish consumer has yet to register significantly, writes John Downes

The affect of international rises on the cost of fuel has been visible in recent weeks among some of Ireland's best-known companies.

Oil sensitive businesses such as Ryanair and Aer Lingus have warned that escalating fuel costs could seriously affect their bottom lines.

And the price of oil on the international market has in turn prompted fears that increasing costs could undermine hopes of a world economic recovery.

But just how acute is the situation for the Irish consumer on the street? Is the situation in the world oil markets impacting here yet?

According to Mr Dermott Jewell of the Consumers' Association of Ireland (CAI), there is little doubt but that the price of oil is beginning to hit home.

"I think people are aware of the price of fuel in particular. Our office would get people calling in saying where they feel it is being offered at a reasonable rate - or an extortionate one," he says.

"Coming into the winter months, anybody using heating fuel will see some element of change there. And any goods imported into the country are going to incur higher transportation costs too."

But there is a need for caution when calculating the impact on the Irish consumer, Mr Jewell warns. The CAI believes the current situation, while difficult, should not be used as an excuse by traders simply to increase their prices.

"We are starting to get to a situation where it is being 'talked up'. People are painting horrible doomsday scenarios," he explains.

"Right now it should not be a significant problem. But the consumer should start watching for price increases, people taking advantage of a problem that is not yet there."

One way of combating overpricing may be for the Government to roll back some areas of taxation. This could be an interim measure to ease the concerns of businesses, Mr Jewell believes.

Mr Eamonn Morrissey of the Irish Road Haulage Association agrees, and points out that under the current system, the Government actually stands to benefit from any increase in international fuel prices.

Many drivers involved in the haulage business are severely affected by oil prices, and have seen their fuel costs increase - and profits decrease - significantly this year, he says.

"It is forcing them into a situation where they are trying to put back some of their debts. So they mightn't pay their diesel bill or their taxes for an extra few weeks. But when it catches up with you, you're in trouble," he says

"As the cost of fuel goes up, so does the Government's tax take. But if they decided that 'x' amount is their take, it would help ease the situation."

Another consideration is the use of illegal diesel, a "multi-million euro" industry, according to Mr Morrissey.

While the IRHA would never condone the purchase of illegal diesel, he admits it provides some indication of the survival tactics being employed by some unscrupulous hauliers.

In the domestic airline industry, both Aer Lingus and Ryanair have pledged to absorb any increased costs brought about by the volatile international fuel market, meaning increased ticket prices are, for now at least, unlikely.

Similarly, a spokesman for Bus Éireann says it would not rule out fare increases in the future. But he points out that it buys its fuel in bulk through CIÉ, thereby avoiding the worst short-term effects of volatile markets.

"We would have to take all cost increases into account," he says.

"Long-term increases would have a significant impact," he explains. "Week to week fluctuations in the situation would not have a huge impact."

Despite the concerns of the haulage industry, the outlook in the short term for the Irish consumer does not seem too bleak.

Bearing in mind the CAI's warnings about the need to keep price vigilance, it seems the time lag between rises in the price of oil and its effect on high street prices may mean consumers are spared the worst of its effects - as long as the price spike remains relatively short-term. Increased rates in the hard-pressed haulage sector could eventually lead to higher supermarket prices here.

But another possibility is that supermarkets would simply trim their own profit margins to make up the shortfall.

Indeed, Mr David Croughan, chief economist with IBEC, the employer's group, says the impact of most oil price increases is probably currently being accounted for in this way by companies here.

Higher consumer prices as a result of the fuel market depend strongly on the transport content in any given product, although sectors such as petrol retailing would see the effects quicker than others, he also points out

The current situation could have implications for the growth of the Irish economy going forward. But it is not having a significant impact here at the moment.

"Obviously if it persists at the high levels globally for the next 12 months, it is going to get added into costs sometime," he says.