Rural families and lower-paid hardest hit from spiralling fuel prices, new report finds

It also lays bare the impact that significant increases in fuel excise and carbon taxes have had on the price of petrol and diesel at the pumps.

According to the report, taxes and subsidies now account for around 62pc of petrol and 58pc of diesel prices.

Despite a temporary reduction in excise duty on petrol of 20c and diesel of 15c per litre introduced in March, sharp increases in global fuel prices have seen government tax revenue soar.

In June 2022, the Government took 7c more per litre than in June 2021, an extra €27m per month.

The Grant Thornton report found that “considering these fuel price rises in tandem with the recent price rises in utilities such as electricity and gas, consumers have been exposed to a significant increase in their cost of living”.

It suggested that, in general, consumers remain “inelastic” to fuel price rises, given the widespread nature of “traditional” car ownership and the lack of viable alternatives currently available in Ireland.

Currently, 97pc of cars here are either petrol or diesel, with only 0.48pc of cars fully electric.

The report found that while electric cars are becoming more attractive, in the short to medium term, petrol and diesel vehicles will remain the main modes on Irish roads.

Specifically, the report pointed to those who live in rural locations as being the most “inelastic” to fuel price rises, given their lack of accessibility to public transport and their reliance on cars.

It identified the most at-risk group as lower-income rural dwellers, with this cohort being most sensitive to price increases in fuel.

Michael Kilcoyne, chairperson of the Consumers’ Association of Ireland, said the unique challenges motorists face in rural Ireland are being forgotten.

“There is no Luas or Dart available to anyone in rural Ireland,” he said.

“There is absolutely no doubt people in rural Ireland are the worst affected by fuel costs.

“If you don’t have a car, you’re stuck at home – you can’t go to work, you can’t get your kids to school.

“The TDs from rural constituencies don’t seem to say this enough.

“People are seeing their incomes wiped out between fuel and soaring rents.

“There is no rent control outside the cities, and thousands of families are on the brink.

“Unless the Government brings in a rent cap in rural areas, working people will be homeless.

“It’s terrible the stories I hear about people in crisis.”

Kevin McPartlan, chief executive of Fuels for Ireland – the industry body which commissioned the report – said the findings underlined the limitations in the Government’s approach to taxing fuel.

“This study confirms what many of us have suspected in showing that consumers generally remain ‘inelastic’ to fuel price rises.

“Given that the vast majority of vehicles use liquid fuel, and because of the disproportionately rural nature of Ireland and the lack of alternative transport options, this policy of continuously increasing taxes does not actually reduce fuel consumption.

“What it does is inflict real hardship on people. Grant Thornton’s review clearly showed that rural dwellers on lower incomes are the most inelastic to fuel price hikes.

“Hitting people with the least ability to pay and no alternatives available is completely contrary to the principles of a just transition,” he said.

The report also showed that Ireland has one of the highest taxes and duties on diesel – with France, Belgium and Italy being the only European Union countries where diesel was taxed more heavily.

Mr McPartlan said the Government should immediately review fuel taxation to bring revenue back in line with expected income.

“Whether through a reduction in VAT or excise duty or adopting a dynamic approach to carbon tax rates, the Government must act urgently to reduce the burden on Irish motorists,” he said.

However, he added that in the longer term, there needs to be a more far-reaching reappraisal of the State’s energy and climate policies, one focused on reducing pressure on hard-pressed consumers while accelerating the transition to carbon neutrality.

“Private road transport will continue to be essential for many years to come, and it is time for the Government to consider the full range of options which exist for decarbonising transport – including biofuels, hydrogen and other low-carbon alternatives – and how to incentivise their uptake.”

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