Diesel prices have, for the first time, equalled - and often surpassed - those of petrol. Conor Pope seeks the reasons
The cost of a litre of diesel, which climbed above unleaded petrol at many forecourts across the State in the run-up to Christmas, is expected to moderate in the coming weeks, thanks largely to seasonal factors, according to oil industry observers.
The irishfuelprices.com website, which points consumers to the cheapest - and priciest - petrol stations in their locality, has in recent weeks recorded diesel inching ahead of petrol with many of the stations surveyed reported to be selling it at prices of between one and three cent per litre higher than unleaded.
While data from AA Ireland suggests that petrol remains, on average, slightly dearer than diesel, it does indicate a narrowing of the gap between the two fuels - the price of petrol fell 3.5 cent last month from November highs, diesel prices in the same period fell just 2.8 cent, AA figures show.
Experts have been struggling to find an explanation for the shift in prices. "It's a very unusual pattern," says the AA's Conor Faughnan. He points out that in 12 years of monitoring fuel prices, AA Ireland has never recorded diesel prices so close to petrol prices. He is at a loss to explain why. "We're looking round for an explanation," he says. "Why it's happening is quite mysterious."
Dermot Jewell of the Consumers' Association of Ireland has noticed the shift, but says that because of a "lack of clarity in fuel prices" it is next to impossible to pinpoint what is behind it.
He points out that car fuel can range in price from 87 cent a litre to over a euro, depending on the area.
"These price differentials are completely unexplained," Jewell says. "It would appear, however, that, if you charge prices that fit in with other petrol stations in your area, you can get away with it."
He warns that a rise in the cost of diesel could have the knock-on effect of driving up other costs and expresses his concern that, if the cost of diesel is maintained or continues to increase, delivery costs will also rise and these will be passed on to the consumer.
"The lack of clarity on fuel prices means it will be easy for delivery companies to say: 'diesel is more expensive, so we have no option but to put up our own prices.' It's an unpleasant situation," he adds, and says that, while the ink on the Minister for Finance's last budget is barely dry, the Consumers' Association of Ireland will try to impress on the department the need to do something to regularise the pricing of fuel.
Seasonal factors contributed significantly to the rise in the price of a litre of diesel as the fuel has secondary purpose as a home-heating fuel. According to the big oil companies, the rise in the price of diesel is "not an Ireland-specific issue".
An Esso spokesman told Motors that international demand was driving the price rises. "All crude oil products are internationally traded and, depending on individual demand on the global market, relative prices can rise and fall quite significantly," he says. "Because of the demand for diesel in the winter months, prices will strengthen in comparison to petrol." A spokesman for Chevron Texaco agreed: "There are no factors that are specifically related to Ireland. It's simply down to supply and demand."
He says that a milder than expected winter along the eastern seaboard of the US has led to a fall in the price of distillates over the past two weeks and, if demand continues to slacken, prices at the pumps will inevitably fall.
Dr Marcel Cohen, of the Imperial College Business School in London, believes the rise is not entirely down to seasonal factors, and says that another reason for the relative rise in diesel prices compared to petrol may be because the demand for diesel cars has failed to meet expectations in recent years.
As a result, he claims, oil companies have started to reduce the supply of diesel to petrol stations. "The competition for diesel is less than the competition for petrol which has driven up the price relative to petrol," he says.
While cheaper fuel prices recede - at least in the short term - cars which run on diesel can still prove more economical than their petrol counterparts. If, for example, you have mileage of more than 20,000 miles per year and plan to keep your car for more than four years, then there is a justification for paying the approximately two thousand euro more for a diesel model.
There may also be environmental reasons for switching to diesel cars, according to some in the motoring industry. Although widely perceived as being noxious pollutants, "oil burners" have come a long way, says Joe Gantly, the Alfa Romeo and Fiat spokesman in Ireland.
He says the company's multi-jet turbo diesel engines, for instance, are virtually indistinguishable in terms of performance from their petrol cousins, but offer huge advantages in terms of environmental friendliness and fuel economy.
It would appear that the bonus of cheaper fuel at the pumps is not, however, among them, at least for now.