Petrol and diesel prices in Ireland have climbed for the fourth successive month, as the ending of the VAT reduction along with further increases in crude oil prices brought the cost of both petrol and diesel to their highest level since the pandemic began.
According to AA Ireland’s latest fuel price study, the average cost of a litre of petrol has increased by over 5c to a current rate of 138.9 on average – up from 133.8 last month. Meanwhile, diesel prices within the past month have increased at a similar rate climbing to a current average price of 129.8c per litre – up from 124.9c last month
The two primary reasons for the climb in fuel prices are the ending of the temporary VAT reduction at the beginning of the month and a further increase in crude oil costs compared to last month.
The return to the 23% VAT rate from the temporary rate of 21% is estimated to have added approximately 2c to the cost of both fuels. Meanwhile, crude oil prices have continued to climb in the past month. At the time of the AA’s analysis, crude oil costs had risen to approximately $67 per barrel, up from $64 in mid-February.
“The decision to end the reduction in VAT at the beginning of March had been known in advance, but given that many families across the country are still dealing with the financial impact of COVID-19 a continuation of the lower rate, for at least as long as Level 5 restrictions remain in place, may have made more sense,” Conor Faughnan, AA Director of Consumer Affairs stated. “Often when we discuss fuel prices, most of the attention is on crude oil costs or international factors such as OPEC reductions in production. However, the reality is that these factors only affect about one-third of prices at the pump, with our own tax system playing a much larger role in what we pay for fuel.”
The increase means that the price of petrol and diesel is now at the highest level since COVID-19 restrictions were introduced in 2020. Despite this, both fuels remain below the per litre cost seen at the start of last year. In January 2020, the AA’s monthly fuel study found that a litre of petrol cost 144.5c per litre on average, with diesel costing 135.9c per litre.