Drop in fuel prices for motorists after two months of increases

The cost of a litre of petrol has dropped by over 2c

Fuel prices up 5c on December 2016 Prices

After two successive months of increases at the pumps, the average cost of both petrol and diesel in Ireland has dropped this month with the reduction in VAT and a minor slump in crude prices the main contributing factors.

According to the AA's latest fuel price study, the cost of a litre of petrol, has dropped by over 2c in the past month, following a decision to reduce VAT from 23% to 21%. Following a 4.1c increase in July and a 1.6c increase in August, the average cost of a litre of petrol in Ireland has now fallen by to 124.9 – down from last month’s average price of 127.5c. Meanwhile, diesel prices saw a similar decrease now costing on average 116.5c per litre compared to last month’s price of 118.5c.

The increase continues a pattern of fuel prices remaining significantly below levels seen in 2019 and early 2020 as the impact of measures globally to fight the spread of Covid-19 contributed to a reduction in demand. At the start of 2020, a litre of petrol cost 144.5c, with diesel costing 135.9c on average.

“The VAT reduction came at a good time for motorists as we had started to see prices at the pumps creep back up in recent months largely driven by crude oil prices bouncing back from historic low levels. However, with Budget 2021 on the horizon we would encourage the government to review the current level of taxation on both fuels in order to lessen the financial burden on many who need a car to keep their current job or to seek a new source of employment following a job loss resulting from COVID-19,” Conor Faughnan, AA Director of Consumer Affairs stated. 

“We know that we need to move people away from fossil-fuel-powered vehicles, especially diesel cars, but it’s clear that simply adding more tax to fuel does not encourage that transition. The Budget needs to include strong incentives on electric vehicles, such as a diesel-to-electric scrappage scheme, but should in the short-term also include some form of fuel tax reduction to aid those, particularly in rural Ireland, who are forced to rely on a car for work.”

Following significant drops earlier in the year, have largely remained stable in recent months, but did fall slightly over the past 30 days. Brent Crude Oil is trading at approximately $42 per barrel, down from a price of approximately $45 per barrel in late August. However, this price of crude oil remains significantly below prices of up to $65 per barrel seen in late 2019.

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