Price of oil is dropping... but petrol is going nowhere fast
THE price of a barrel of oil has dropped by nearly $10 over the past month – but the cost at the pumps in Ireland has only fallen by a couple of cent.
And industry experts say the price here is unlikely to fall much further thanks to the weakness of the euro against the dollar.
Petrol prices have fallen by a two cent since July, while diesel prices are down three cent in the last month.
A spokeswoman for AA Ireland said: ‘Crude oil is at its lowest since the beginning of the year, with global demand becoming relatively sluggish.
‘For this reason, we’d expect the price of petrol to fall – currently there’s no reason for it spike.
‘In short, we’ll see a modest reduction in the cost of petrol over the next month or so, although the effect of the euro continuing to weaken against the dollar will counteract this.
‘Beyond the next month, however, it proves a lot more difficult to forecast costs due to the unpredictability of f uture market trends.’
According to the AA, the average price for diesel in Ireland current stands at 128.8c per litre, while petrol prices average at 143.60.
This month’s falling prices came as crude oil dipped below $50 a barrel last week, less than half its level last summer. This was driven by record production in Saudi Arabia, which opened two new oil refineries this year, as well as slowing growth in China.
Meanwhile in the UK, the average price of diesel has fallen below 113p per litre for the first time since January 2010, according to information group Experian Catalist. Diesel had been more expensive than petrol in the UK for 14 years, but its price is now falling more quickly than petrol.
Conor Faughnan, director of consumer affairs for AA Ireland, said: ‘The UK have an advantage over us at the moment because of the relative strength of sterling, we do not have that factor playing in our favour.
‘In the UK they have a different rate of tax on their fuel than we do here in Ireland, they actually tax their fuel more in the UK than they do here so it’s not really comparing like with like if you compare the two.
‘These things equal out over time but right now it’s favouring them.’
He continued: ‘ Oil is getting weaker on world markets but that effect is much more pronounced for the UK than it is for us because of the relative strength of sterling compared to the euro.
‘Petrol and diesel right around Europe essentially cost the same, there is no difference at all until local taxes are applied. The reason why it’s different at the pumps is because each individual national government puts their own amount of tax on the top.
‘There have been five separate tax increases on both petrol and diesel since the emergency budget of October 2008 which between them added approximately 23 cents per litre to the retail price.’ But parents watching their pennies due to back-to- school costs will welcome the news that petrol and diesel costs are the lowest for the month of August since 2010.
Mr Faughnan said: ‘It’s accurate to say that the price at the pumps is the lowest it has been for five years.
‘In August 2010, diesel was 123.2, by August 2011 it shot up to 143, August 2012 was 154, August 2013 was 150, and August 2014 was 146.
‘So it is quite a bit lower than last year, it’s the lowest it has been for quite some time.’
Petrol has also dropped from a peak of 163.1c per litre in August 2011 to this month’s average of 143.60c.
A survey carried out by AA Hospitality Services earlier this summer found over a quarter of people said they are planning on taking more short weekend breaks in Ireland this year compared to last, thanks to lower fuel prices.
‘UK has an advantage’