| 14.3°C Dublin

Petrol prices to fall even further in coming weeks


AA Ireland spokesman Conor Faughnan

AA Ireland spokesman Conor Faughnan

AA Ireland spokesman Conor Faughnan

The cost of petrol is likely to fall another six or seven cent per litre by the end of January, according to motoring experts.

Conor Faughnan of AA Roadwatch said average oil prices in Ireland in recent days were "just a whisker over €1.30 per litre".

"But that's a snapshot of something that's actually in a state of motion, and it's falling as we speak.

"We expect that when we conduct our February fuel price survey in about three weeks' time, we will see an additional fall of between six and seven cent per litre.

"The omens appear to be good but you can't look beyond a certain timespan with any certainty.

"A variable that seems to be pulling against us is that the euro continues to weaken against the US dollar."

Speaking to the Irish Independent, he predicted prices would keep falling for the next few weeks. "After that it's by definition speculative," he added.

"You'll find plenty of people forecasting one way or another as to what's going to happen to crude oil prices during 2015. But they are all, with varying degrees of insight, just guessing."

He also pointed out there was a "time lag" effect which had to be taken into consideration.

"What happens beyond a one-month horizon depends on the level of crude oil prices at a given time."

He also pointed out that a crucial factor that underpins petrol pricing in Ireland is that the Government must receive a minimum amount in taxation, regardless of what the motorist pays.

Excise duty, carbon tax and the national oil reserve levy are all fixed independently of the retail price at the pumps.

"Therefore, the more the price falls for the consumer, the higher percentage of the price of each litre which must go to the Government.

"Say a litre retails at €1.30. The garage gets three or four cents. The wholesaler/distributor gets seven or eight cents. And Michael Noonan gets 85 cent.

"It would cost 47 or 48 cent if there was no tax at all. That would be the cost of the fuel - plus a margin for the distributor and retailer.

"If such a thing as a tax-free litre existed, it would cost less than 50 cent," he said.

Meanwhile, international trends such as high production levels for crude oil - coupled with sluggish global demand - will help keep prices extremely competitive in the coming months.

Central Statistics Office figures show that petrol prices in Ireland fell by just 3pc in 2014, with diesel dropping by 5.5pc.

Meanwhile, Department of Finance sources have dismissed any possibility of reducing the Government's tax take at the pumps. Fuel retailing in Ireland has been described as "a high turnover but low-profit margin" business.

Read more:

Irish Independent