Fuel prices are going in the wrong direction again, are they?

They absolutely are. The price of crude oil and gas spiked in the immediate aftermath of the US-led war on Iran in the early spring but steadied as we headed into summer with both sides appearing to be inching towards some class of settlement. Hope of that happening has receded in recent weeks with the collapse of a tentative truce, the failure of talks to make any meaningful progress and then – in more recent days – the resumption of hostilities driving oil prices higher on global markets.

How much higher are we talking?

Well, the situation changes by the hour but at the time of writing – Friday morning – the price of a barrel of Brent crude, which is widely considered the global benchmark for wholesale oil prices, was just under $105.

And how does that compare with before the war?

Before the war started it had been hovering at around $70 a barrel and topped $120 in the days after the conflict began. When it looked like a deal was closed in the summer prices fell to less than $72 a barrel. They have been on an upward trajectory for weeks now.

What does this mean for Irish motorists?

Things are not looking good for Irish motorists (although they are not the worst impacted. More of that in a bit). The price of a litre of diesel on many forecourts this weekend will be north of €2. The most recent figures from the AA put the average price of a litre of petrol at €1.835 while a litre of diesel was €1.915. But those figures were published in the middle of last month and the picture has darkened considerably since then. The fuelwatch.ie website is putting the average price of a litre of petrol at €1.87 as of Friday morning while a litre of diesel costs €1.96 with some forecourts charging around €2.03.

And how do these prices compare with earlier in the year?

Well, a few months back both petrol and diesel were priced at around €1.70. That means many motorists are now paying as much as €20 more for a full tank of fuel than they were in July. If such high prices were to be sustained over the course of a year then the additional annual cost faced by motorists would be close to €350.

Brent steady near $101 as Iran says it is prepared for intense war

But prices are not going to stay this high for a year are they?

Hmm. They might well do that. Speaking earlier this week the Taoiseach Micheál Martin said the “sense is that the new normal is where we are now in respect of fuel prices because of the war in Iran and because of the fact, the global experts are saying, that there is no immediate sense of a reduction in oil prices”.

So we’ll be paying €2 a litre from here on in?

We might actually be paying more than that because it is worth remembering that the current prices do not take into account the temporary tax cuts that currently apply to both petrol and diesel.

Remind me what they were?

In April, the excise duty on diesel was lowered by 32 cent while the duty was cut on petrol by 27 cent on a litre of petrol. Had there been no cuts, then, the price of a litre of diesel on many forecourts would currently be around €2.30, while a litre of petrol would cost around €2.10

You said those excise cuts were temporary. Surely the Government can’t raise taxes on fuel when it is at these levels?

It would certainly be a wildly unpopular move. As it stands, the excise could start being increased to previous levels from November but that is not set in stone and it could be that there will be a further delay in increasing the taxes announced in next month’s budget.

And what is the story with home heating oil?

To be honest, while most of the attention is on the cost of motor fuels, the rising price of home heating oil is arguably a much more serious problem. It doesn’t get the attention that petrol and diesel get because prices are not advertised in large writing outside every petrol station in the country and people looking for home heating oil do not require top-ups as frequently. There is also an urban-rural divide at play with many homes outside of large towns and cities absolutely reliant on home heating oil.

And prices are climbing there too?

Absolutely. Right now 500 litres of home heating oil is averaging €790. In early July, admittedly when demand would have been low, 500 litres was averaging €590. In February, just before the war in the Middle East began, the same volume of home heating oil was priced at around €490. A typical Irish three- or four-bedroom house will use between 1,500 and 2,000 litres of home heating oil in a year which means the spike in prices is likely to cost many homes as much as €900 over the course of a year.

But the Government has acknowledged that and cut taxes to support homeowners who rely on home heating oil has it?

Um. No. There have been some minor tweaks to the levies attached to such products but the taxes remain largely unchanged which means this cohort are likely to pay the highest price for Donald Trump’s military misadventures in the Middle East.

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