The renewal of hostilities in Donald Trump's war against Iran is likely to cause a significant spike in fuel prices at the pump across Ireland. Indeed, Fuels For Ireland is already warning that background costs are rising sharply.
How much could prices go up by?
That remains to be seen. Some oil trading analysts are predicting a $200 per barrel cost for crude oil if the conflict continues to close the vital Strait of Hormuz, although according to Kevin McPartlan, the CEO of Fuels For Ireland (the umbrella organisation that represents forecourts and fuel suppliers), that's not really the figure to watch.
"Brent crude is not the most reliable indicator of what motorists will pay in the short term. The more significant development is the sharp increase in wholesale prices for refined fuels, particularly diesel. Over the past two weeks alone, the wholesale price of diesel has increased by around 20 cent per litre, equivalent to approximately 25 cent per litre once VAT is included,” said McPartlan.
The price at my local station hasn't gone up much yet…
Just wait. According to McPartlan: "that increase has not been reflected in full on forecourts across the country. This demonstrates that fuel retailers are absorbing a significant proportion of these additional costs rather than passing them directly on to customers, placing considerable pressure on already tight retail margins. Looking ahead, there is a real risk that further Government tax increases will compound the impact of rising international prices. If the planned phased restoration of excise duty proceeds, together with a further increase in carbon tax in the forthcoming Budget, the price of diesel could reach approximately €2.30 per litre from the 1st of January, assuming there are no further movements in international markets.”
Is there anything that can be done to keep that price rise in check?
Sort of. The Irish Government introduced a swathe of tax reductions on petrol and diesel, as well as grant payments for hauliers and those in the agricultural sector, both before and after the fuel protests that tried to bring the entire country to a standstill back at Easter. It seems unlikely that there's much more tax fat to be trimmed, but McPartlan is saying that there are still levers available to the Government:
"At a time when households and businesses are already facing increasing costs, allowing domestic tax increases to coincide with a period of exceptional international market volatility risks placing additional financial pressure on consumers and creating wider economic and public concern. While Ireland cannot influence global commodity markets, it can decide how domestic taxation responds during periods of significant external disruption.
"The Government should immediately review the planned phased restoration of excise duty, currently planned to commence from 1 September, in light of current international market conditions. Decisions taken when wholesale markets were relatively stable should not proceed automatically if circumstances have changed so fundamentally. More broadly, these developments once again underline the need for a more strategic approach to transport fuel taxation. Rather than continuing to respond to successive international crises on an ad hoc basis, Government should establish the independent expert group proposed by Fuels for Ireland to examine Ireland's long-term approach to fuel taxation. Bringing together Government, industry and consumer representatives would help develop an evidence-based framework that balances affordability, energy security and decarbonisation, while providing greater certainty for consumers, businesses and policymakers when future global shocks inevitably arise.”
Is there anything that we can do as individuals?
You can protect yourself against rising fuel prices, to an extent, by trying to drive more economically, having your car serviced so that it's running as efficiently as possible, and making sure that your tyre pressures are kept correct. Or you could try leaving the car at home a bit more often and walking, cycling, or taking public transport, or working from home where and when possible.
However, it's impossible to entirely insulate yourself against global oil prices as they will also have a huge influence on the cost of food and other goods and services, as well as on broader energy prices.
The biggest issue of all is that there's realistically very little you, I, or the Irish Government can do right now, as the single biggest driver of global oil prices is Donald Trump's temper.