Explainer: Everything you need to know about changing fuel prices and how you can save up to €100
'Motorists could see huge savings by shopping around and seeing which garages are offering the best deals'
Petrol and diesel prices have fallen again this month, but what does the changing fuel prices mean for you and your budget?
A drop of 2.4c in petrol and a 3c drop in diesel prices means petrol now costs an average of 131.9c a litre, while diesel now costs 119.2c.
Petrol prices are now at their lowest since December 2016, while diesel is at its least expensive since October 2016.
Conor Faughnan, AA Director of Consumer Affairs, spoke to Independent.ie to give you everything you need to know about the changing oil market and how you can take advantage of it.
Why do we have fluctuating fuel prices?
In 1991, the Government scrapped a policy that set a maximum price for fuel. After October 1991, the State said that garages could decide what price they sell oil for, which would allow consumers to shop around.
On a whole, the Government thought the consumer would benefit as competition between garages would keep fuel prices down. Overall, this proved to be true.
However, this has lead to prices rotating around an average, depending on a number of factors.
What factors cause the change in fuel prices?
Both domestic and international factors determine fuel prices.
On an international level the value of oil depends on world markets and the exchange rate. We're seeing prices go down at the moment as the euro is strong against the dollar.
When the price of a barrel of oil, which is our raw material, drops, we will see a drop in fuel prices here.
On a domestic level, once fuel lands in Ireland, the price is set by competition and Government tax.
Garages can charge what they like but prices will cluster around an average.
Intelligent consumers should keep an eye open and notice which garages are offering better prices.
Does the oil industry faithfully pass on reductions to Ireland when oil is cheap?
Yes. We don't see evidence to prove that it takes longer for petrol stations in Ireland to reduce prices after countries rich in oil see a drop in price for raw materials.
It's often said that when oil prices are high, petrol stations are quick to rise the cost of petrol and diesel but when oil prices are cheap, it takes longer for prices to drop. However, we don't see evidence to support that suggestion.
Countrywide Irish people should see a reflective average but there are plenty of garages who take a while to adjust prices.
How can we save money on our fuel costs?
Motorists should make sure to shop around.
A typical family with a car that holds 50 litres of fuel with normal mileage of 12,000 per annum will use 1,800 litres of fuel. Prices between garages can vary as much as five cent per litre. Something as small as a five cent per litre can save a motorist €7.50 a month or up to €90 a year.
Motorists should be savvy and notice which garages are offering the best deals.
The price of fuel also varies depending what part of the country you are in. Low fuel prices can be found in Louth, Kildare and parts of Dublin, while higher prices can be seen in counties such as Tipperary and Wexford.
Is Brexit likely to have an impact on Irish fuel costs?
No. It is having a hugely significant impact on the UK as the value of sterling is low. It's pushing up the price of fuel in sterling but we trade in euro so we're not affected.
What role does the Government have on the price of fuel?
The Government controls two-thirds of the price of fuel in Ireland.
The cost of oil only contributes to one-third of the price that Irish people pay for their petrol or diesel. This is why varying oil prices across the world only have a slight impact on the costs we see here in Ireland.
Two-thirds of the price is Government tax.
It's a tremendous amount of tax and is a huge source of revenue for the State.
The price of tax is entirely up to the Irish Government.
In October 2008, the Budget at the height of the recession included a huge increase on the tax in fuel.
The Government added about 22 cent per litre of fuel to generate some income during the crash.
That increase in tax has remained ever since. After the crash, the Government chose to leave the taxes high.
Did this huge increase in tax go unnoticed?
To an extent, yes.
During the global recession, oil prices collapsed. So the price of the raw material fell drastically but the tax rose. This meant that there didn't appear to be any huge change in the price of petrol or diesel here in Ireland.
When the price of oil rose again, the taxes remained. Retail prices will always remain high because of the tax.
The raw material prices does affect one-third of the retail price and that will go up and down based on domestic and international factors but two-thirds of the price goes straight to tax.