Febrile days of fuel price rises and anger: Kevin McPartlan of Fuels for Ireland
Staff working on forecourts were abused and threatened after the government announced it would be dropping excise duty on fuels, Kevin McPartlan tells IFCR.
The CEO of Fuels for Ireland says it was untrue and hurtful when TDs accused fuel companies of profiteering on petrol and diesel prices.
As fuel prices rocketed in the wake of the Russian invasion of Ukraine, Mr McPartlan said the government made a “shocking error” in raising customers’ expectations that the excise duty cut would have an immediate impact on pump prices, and this led to some dark days as staff at filling stations were singled out for abuse.
“We already had high prices in Ireland, and then there was this huge increase in international wholesale prices for diesel, petrol and kerosene. In addition to that, there was a huge challenge in actually getting stock,” he says.
“At the time we were very careful in the messaging. We didn’t want to suggest that there was any threat to the stock, because the quickest way to start panic buying was to tell people there was no need to be panic buying, so we were really careful about the messaging around that.
“But we managed stock quite aggressively and that meant there were certain bulk customers for whom we limited volumes that we were prepared to sell.”
As fuel prices rose rapidly in the wake of the Russian invasion of Ukraine, many home heating customers were warned that the maximum delivery would be 500 litres, while some hauliers and farmers were limited in how much they could buy at a time.
“That was in response to the fact that prices were increasing so rapidly that they in and of themselves were creating a spike in demand,” he says.
Mr McPartlan recalls the “febrile days” when petrol could have risen by 10c within 24 hours, putting pressure on customers to fill up quickly in case prices rose any further.
“People were doing that, but it was driving demand yet further. So that was a time of stress throughout the industry, including down to forecourt level where individual forecourt operators were trying to manage their pricing in a way to not prompt spikes in demand,” he says.
“Then we had a situation where there were a number of calls on government to make an intervention, and they reduced the excise duty.
“But they made a fairly shocking error, in my opinion, because they told people on the day that the announcement was made that they could expect to see pump prices drop at midnight that night. This completely ignored or didn’t recognise the fact that all stock on the forecourt at midnight had already had the duty paid at the higher level and that caused huge problems because people were coming in the next morning expecting to see a 15c or 20c decrease in the price of their fuel.
“You also have to recognise that wholesale prices for diesel had gone up 20c in the 48 hours before that anyway and that meant you had forecourt staff being abused and threatened. We were accused of profiteering on the backs of the tragic situation of Ukraine which is not only untrue, but it’s not overstating it to say that it’s hurtful.
“The fuel industry had been trying to keep the country on the road. Margins are tight at the best of times and I know a number of people have gone on the record that they were selling at a loss on some days during that week – and to be criticised and attacked was, I think, a dark few days.”
Following that challenging week, Fuels for Ireland set up a meeting with four ministers, led by Michael McGrath, to clarify what was happening within the industry.
“I think the government began to recognise what was actually happening and recognise that very far from profiteering, people had made very significant sacrifices and had taken remarkable steps to make sure that at a time when there was a global challenge to supply, we kept homes warm and we kept vehicles on the road and supermarket shelves stocked. I think there has been a little more recognition since that point of what the industry has actually done during this crisis period,” Mr McPartlan says.
However, the government’s response to the industry’s supply challenges was superb, he says.
Because Russia had historically focused on building diesel refineries, the EU had become a net exporter of petrol and net importer of diesel, and much of that diesel was coming from Russia.
After the invasion, there was a lot of consumer and political pressure not to trade with Russia, while many companies also decided to cut ties, Mr McPartlan says.
“That meant that the supply that was open to us and to the European market was dramatically reduced. Also, the demand was increasing because there were a number of countries that had been using Russian gas to generate their electricity and they commonly switched to using oil and therefore demand increased.
“You don’t need to be a Nobel laureate to recognise that if you have an increase in demand and a decrease in supply, it drives the prices higher and higher.”
The industry in Ireland now faces two major challenges – supply and demand.
“The government response to the supply challenge has been remarkable – it really has been superb,” Mr McPartlan says.
“We are having very regular, very engaged conversations with DECC, DoT, National Oil Reserve Agency at the most senior levels, and I’d have to compliment them at how responsive they have been and how engaged they have been in looking at that part of the challenge.”
Since the excise cut, wholesale prices have risen, and another excise cut came on April 1 which had originally been flagged in November to reduce the impact of the Biofuels Obligation Scheme.
However, Mr McPartlan says the industry is still waiting for government to deliver on its promise to cut the NORA levy by 1c, which was due to happen on April 1, but the primary legislation wasn’t ready.
“We’re waiting to see what they’re going to do on VAT – the government says they need to go to Europe,” he says.
“We have to recognise that fuel, no more than any other real energy cost, is not discretionary. People are not buying petrol and diesel for the craic, they’re buying it because they need to get to work, they need to get the kids to school, businesses need to be able to deliver their products. This is not something that people can say, oh well if the price goes up, I’ll just use less of it.
“When you hear some of the commentary about it – use the car once a week, which was Eamon Ryan’s suggestion. That’s fine if you live in suburban Dublin with the Luas at the end of the road and Dublin bikes and taxis and bus lanes and all the pedestrian infrastructure. “But if you live in Ballyhaunis or if you live in Doneraile, none of those options are really available to them. There needs to be a little bit of reality in how the government is addressing this crisis and it needs to be recognised that ver,y very little fuel is being used for non-essential purposes.”
Mr McPartlan is critical of the Leave It In The Ground campaign which he says hasn’t reduced emissions and has left Ireland having to import fuel.
“We were importing from countries on which we would rather not have dependence and that has been the policy of successive governments, not just in this country and the UK and Europe and the US.
He also targets the policies of climate taxing fossil fuels, saying this has done little to disincentivise the buying of fuels.
“There’s no evidence to show that when you increase the price of fuel, demand reduces – it just doesn’t happen.
“So you’ve reduced those capacities to produce in this and many other western countries, we have this stated policy to increase the price and then we have this huge market shock that has happened in the last five or six weeks – and we’re scrabbling to actually access fuel and we have to be alert to the fact that this could easily be taken out of our hands.
“The question is not just whether we impose oil and gas sanctions on Russia, the question has to be whether Putin decides that the best way for him to hurt Europe instantly is to just shut off supply – that would have a huge impact on global energy supplies but particularly Europe.
Reaping what was sown
“So we’re reaping what we sow in some senses by eliminating any energy independence, by creating reliance on those on whom we would rather not have a reliance and by increasing prices over many years, and we now have a situation where when the shock happened its impact is massive and unavoidable on great swathes of the Irish population.”
Since the invasion, all of the major companies have begun to change their fuel suppliers, along with shipping companies and routes, he says.
“I think it is pretty much inevitable that the Russian fuel that was coming into Europe, whether that be oil or gas, will be diverted to other countries because Europe doesn’t want to support Putin’s regime and doesn’t want a reliance on Russia any more.
“Russia will sell to whoever will buy their product, so China and India have already done big deals. That means that the people who were supplying China and India are now looking to put their fuel onto the market internationally and looking for new places to sell, so Fuels for Ireland members are buying from those members now.
“What that means is that the existing relationships and routes are no longer in play and they all have to be rejigged. That will settle down in a couple of months, one would hope – and therefore the huge volatility should reduce.
“But those new routes tend to mean that fuel is travelling further, all the existing contracts have gone so you negotiate new contracts, and we can’t yet say what the impact on price will be.”
As for fuel retailers facing an uncertain future, there is little he can suggest for now, as the rules on predicting price changes are strict.
“They need to have a good relationship with their fuel supplier so that they get as much information as they can, as early as they can, so they can inform their strategy,” he advises.