Excise on oil must be reduced
With taxes making up over half the price of petrol, it's small wonder retailers are finding it increasingly difficult to fully fill their tanks, writes Fionnuala Carolan.
Print21 March 2011
The last month has been truly exciting and a period in history we are unlikely to forget. It has been a long time since the public has been so passionate about a general election.
Even though it was practically a given that Fine Gael would lead the next government, many took great pleasure watching Fianna Fail get its comeuppance for its considerable failings while in office.
Although Fine Gael and Labour are celebrating their accession to power, the excitement will be short lived.
When the gravity of the problems they have inherited hits home, one wonders how they will respond.
There will be a certain period of grace afforded to the newbies but once that is up, the public are not going to stand for another government doling out empty promises.
It is vital that to stave off the public wrath, they will need to make good on a number of core election promises.
Although we would like the government to deal with lots of issues affecting the retail industry like rents, rates and Joint Labour Committee pay rates, there is another issue that needs even more immediate attention.
The price of petrol has gone through the roof with it now hitting €1.50 at the pumps and forecast to climb even further due to the continuing conflicts in the Middle East.
Retailers are being blamed by consumers for this hike but the reality is that retailers are even finding it difficult to fill their tanks at the current price.
When retailers can’t even afford to stock the commodity, we know we have a problem.
Yet this rise in world oil prices shouldn’t be affecting us to such an extent. The reason we are paying so much for petrol is that taxes make up over half of the price.
The AA released a breakdown of the cost of petrol and diesel. When the consumer spends €1.50 on a litre of petrol, 58c goes on excise including carbon, 2c on Nora (National Oil Reserves Levy) and 26c on VAT. In percentage terms taxes make up 57.12% of the total price.
When buying diesel at €1.45 it is broken down as 47c on excise including carbon, 2c on Nora and 25c on VAT making the total tax just over 50%.
According to the Irish Petroleum Industry Association the wholesaler makes about 6 cent per litre and the retailer makes about 4.5 cent per litre.
However many don’t make anywhere near this much margin as they try to compete with other forecourts and try to entice consumers in with lower prices hoping they will spend money in the convenience store. As Conor Faughnan of the AA so succinctly pointed out: “Vast fortunes are made from oil, no doubt about it, but they are not being made by the garage at the end of the food chain”.
The National Consumer Agency (NCA) would seem like the obvious body to take this point up with the new government but it already has come out and said that all it can do is ensure that service stations are displaying the correct prices and providing us with some wonderful nuggets of advice such as urging motorists to drive slower to save petrol and to shop around for the best price.
Good to see that the €8.6 million a year that is spent to run the NCA is being well spent then. Maybe the first thing the government should look at doing it disbanding the NCA and using this money to reduce the excise on oil.
Fionnuala Carolan
Editor
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