Motorists have been told not to expect fuel prices on forecourts to fall immediately but they have been assured that the 10 cent excise cut that took effect overnight will feed through by the weekend.
However, there have also been warnings that fuel prices are continuing to climb due to volatility on global oil markets with the stark possibility that war in Iran could quickly negate all the tax cuts rolled out by the Government.
The chief executive of Fuels for Ireland, Kevin McPartlan, said he understood motorists would want to see the excise reduction reflected at the pump as quickly as possible but stressed that it was “important to say that this may not happen at every forecourt immediately, and that should not be misunderstood as a failure to pass on the tax cut.”
He said the reason for some delays was “practical” and he pointed out that excise duty is applied “when fuel leaves a terminal or refinery, not when it is sold at the pump.
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“In recent days, the industry has been operating under disrupted conditions, and the priority has been to keep fuel moving and forecourts supplied where possible,” McPartlan said.
That means some of the fuel arriving at sites in the immediate aftermath of the change will have left facilities at the old excise rate.
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McPartlan warned that there “may be limited movement at some pumps immediately after the new rate takes effect from midnight. The reduction is coming through, but there will be a lag as lower-duty fuel works its way through the system.”
He said that while some busy fuel forecourts may update quickly “others it may take 48 to 72 hours, with the overwhelming majority expected to reflect the lower rate by the weekend.”
He noted that international wholesale fuel prices are continuing to move independently of tax changes and warned the volatility “may reduce some of the visible impact at the pump in the short term.”
He pointed out that wholesale diesel prices have increased by approximately 5 cent per litre since the excise announcement and when VAT is applied, it equates to over 6 cent per litre when sold to consumers.
“The key point is that the excise reduction is taking effect, it will be passed through, and any delay in seeing the full effect is explained by operational reality,” he concluded.
His comments came as the AA published fresh fuel price analysis showing rising pump prices continue to place significant pressure on motorists and farmers, despite a second round of Government tax relief measures announced in response to recent nationwide protests.
According to the AA data released hours before the excise cut comes into effect, diesel is €2.14 per litre on average while petrol has risen to €1.91 per litre. In February, both fuels were averaging around €1.72 a litre.
The is considerably better news for drivers of electric cars, with the cost of both home and public charging prices remaining broadly stable in contrast to volatile fuel prices
“Motorists are continuing to feel the pressure, with diesel prices remaining well above the €2 per litre mark. The Government’s latest intervention will provide some short-term relief, the scale and speed of recent increases mean many drivers are still paying significantly more than earlier this year,” an AA spokesman said.
He said that while the tax cuts were welcome, it “remains uncertain whether they will be enough to offset continued volatility in global oil markets”
Fuel prices continue to be influenced by global oil market trends, geopolitical tensions, and currency fluctuations with Brent crude trading above $100 per barrel. “These factors are likely to sustain volatility in the weeks ahead, meaning that further price movements remain possible,” the AA said.
