The Government is to look at reducing excise duty in order to cut the cost of fuel to the consumer, Tánaiste Leo Varadkar has told the Dáil.
Leo Varadkar singled out excise as he spoke of the Coalition tackling the crippling cost of fuel to consumers, with the price at the pumps now €2 per litre.
He said the Government, having taken steps toward household relief, was now looking at “other ways” to reduce the impact of events that were outside the Government’s control.
“We are more concerned about energy prices. Everyone driving by the forecourt this morning will have seen the price of petrol and the price of diesel,” he said.
Petrol had gone through the psychological €2 per litre, “as is being seen in some stations at the moment”, he added.
“We've already seen increases in our in our gas bills, our electricity bills, and unfortunately because of the events in Ukraine, we're likely to see further raises over the next couple of weeks.
“The Government will respond. We did respond already in terms of the fuel allowance and the household discount for electricity bills. We're looking at other ways that we can respond.
“We need to look at excise, I think, in particular, and see if we might do something there.”
Mr Varadkar said it would be dishonest not to say to people in business that the reason for the increases in price “are largely outside of our control”.
He added that the proportion of energy prices covered by taxation was actually falling as prices surged.
Mr Varadkar also said he was confident Ireland had energy security as things stood, and would not suffer shortages.
He said the giant Moneypoint power plant on the Shannon estuary had been burning some Russian coal, but had now switched to Colombian coal.
“We believe that our energy supplies are secure, at least as secure as they can be in the current context,” Mr Varakdar said in response to Sinn Féin questions.
“We did use Russian coal to run the power station at Moneypoint, but that's now been switched over to Colombian coal.”
Ireland was not dependent on Russia or Ukraine for gas, he added.
“Our gas comes from Corrib [the offshore gas field] – at least a quarter or a third does – and that’s our own gas, and the rest comes from the UK,” he said.
Ireland was receiving both gas from the North Sea and also liquefied natural gas brought in through terminals in the UK.
“So we're confident at this stage that we won't face any disruption in terms of the supply of gas, or petrol or diesel, or electricity.”
In the long term the energy security issue would be resolved by renewable generation and green hydrogen, he said, “but that's many years away”.
Earlier, Taoiseach Micheál Martin said food security is going to be an issue across Europe as a result of the Ukraine war
Asked about possible rationing, he said: “I don’t want to jump ahead.”
Mr Martin had been discussing energy and oil prices when he volunteered a concern about food, but put it in the context of “continental Europe”.
“Food security is going to be an issue across the continent of Europe, in my view,” the Taoiseach said during a press conference on the 2022 census.
He referred to the damage being inflicted on Ukraine, often described as “the bread basket of Europe”.
Mr Martin did not expand on his remarks until asked about possible rationing in Ireland.
“I don’t want to jump ahead,” he said. “We are only one week along, in terms of the war breaking out. Things can change very quickly.”
He said Ireland was keeping an open mind in relation to energy security, and “potential scenarios”, after being asked about a planned expansion of liquefied natural gas storage at Shannon.
He said there had been “exponential growth” in prices and the Government would take steps to protect the economy and to safeguard the economy.
But he singled out transport and farming as areas particularly hard hit, with a surge in the price of fertiliser and other inputs.
Mr Martin has warned the price of groceries and goods will increase in the short term.
Costs “are likely to go higher” as a result of the Russian invasion of Ukraine, particularly in regard to fuel costs, feeding into power and transport.
There will be an effect on domestic inflation, after there were indications that the level of increase seen since last year was beginning to plateau, he told TDs.
Inflation was 5.5pc in December, but it eased to 5pc in January, he said.
“Electricity, gas, home heating oil, petrol, diesel, motor cars and rents were the main contributors to inflation as some food products – bread, pasta and soft drinks – have also risen markedly,” he said.
In 2021, the country spent €6.2bn on imported fuels, compared to €3.4bn in 2020, he pointed out. “So it gives you an illustration of the scale of these things.
“It is a €2.8bn increase, reflecting the higher prices on the international market.”
A barrel of oil last year cost $64 on international markets. Today it costs $110. Oil prices have risen by $14 a barrel over the past week alone, he said.
A therm of natural gas costs cost 400 cent today on international markets – compared to 40 cent a therm last March. Gas prices had soared 220 cent a therm only in the past week.
“So these are enormous increases in a very short period of time,” he said.
Mr Martin said the latest CSO data suggested wages had risen at the end of last year by 2.6pc from a year earlier, and were cumulatively up 8.2pc from 2019.
Euro area inflation has gone up again, and is now at 5.82pc, he said.
“So we’re in a very difficult situation.”
The Government had responded on the cost of living, he said, listing steps taken, including raising the fuel allowance from €630 to €1,039 since coming into office, along with the new electricity credit of €200.
“We've taken other measures in respect of the family payment, and the reduction in public transport fares would benefit 800,000 people from the end of April, he said.