It’s the End of Days for Cheap Diesel

By JIM CLARKE

THE AA reckons sky-high diesel prices will be OVER by the summer.

But it’s not all good news – it also predicts the days of diesel as a cheap fuel are gone forever in the long run.

And were it not for a costly error by the American petrol industry, petrol prices would be higher even than the current record diesel prices.

The AA’s Conor Faughnan warned the Oireachtas Transport Committee there is a Europe-wide shortage of diesel, whereas petrol stocks in the US are at a 10-year high.

The motoring organisation has conducted an investigation to discover why diesel prices are currently so high in Ireland.

Normally, the cost of the fuel peaks in winter, due to the demand for heating oil, then slips back to below the price of petrol for the rest of the year. But this year, the price of diesel at the pump simply kept on rising into spring.

Conor Faughnan said: "We have expressed a serious concern at what appears to be a disproportionate rise in diesel prices.

"We challenged the oil industry in Ireland to be more open in its pricing and to provide clear explanations as to where these rises are coming from."

According to the AA’s investigation, the record oil prices globally should be driving up the cost of petrol and diesel at the pump.

But while diesel prices have soared, the cost of petrol has not risen in tandem with it.

This is because American producers switched much of their production in the Gulf of Mexico to petrol, on the assumption that prices would rise.

"They took a gamble, betting on high gasoline demand," Conor explained. "In fact consumer demand for petrol was sharply down and the industry was left with a large stock of petrol."

Because producers need to sell petrol stocks, this is keeping the price of petrol lower than it might otherwise be.

The AA has warned that there is a shortage of diesel across Europe, which is having an upward effect on prices.

And now Irish Small and Medium Enterprises Association (ISME) is calling on the Government to ringfence its EUR75million fuel duty windfall and use it to reduce Environment Minister John Gormley’s planned carbon taxes.

"It is conceivable that the price of oil could hit EUR200 a barrel over the next number of months, which would be catastrophic to Irish businesses, particularly in light of our huge dependency on imported energy products," ISME chief Mark Fielding said.

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