Forecourt Retailers on Borders are at Risk: FFI’s Urgent Call for Balanced Fiscal Policy
by Kevin McPartlan, CEO Fuels for Ireland
The issue of fuel price disparity between Northern Ireland and the Republic of Ireland has become a pressing concern. With the last implementation of excise duties on petrol and diesel in the Republic, a significant gap in fuel prices has emerged, creating economic and social challenges that must be addressed urgently.
In February 2024, petrol prices in the Republic were around 171 cents per litre, with diesel slightly higher at 171.7 cents. In contrast, Northern Ireland’s petrol prices averaged 139.2p per litre and diesel 147.9p per litre.
Gap widened
The gap widened further after the UK’s decision to freeze fuel duties for another year while the Republic reinstated full excise duties from April 1, 2024. According to AA Ireland, average petrol prices in the Republic rose to €1.83 per litre in May, while diesel prices saw a slight decrease to €1.76 per litre.
This disparity has far-reaching consequences. Border-area motorists are increasingly crossing into Northern Ireland to benefit from lower fuel prices, undermining local businesses in the Republic. This trend currently threatens the viability of around a dozen retailers in the border counties of Louth, Cavan, Monaghan, Leitrim, Sligo and Donegal, which are crucial to local economies and communities.
Energy costs
The Irish government’s decision to restore full excise duties, despite ongoing cost-of-living challenges, exacerbates the issue. Households already grappling with high energy and food prices now face further financial strain. The notion that higher fuel taxes will accelerate the transition to electric vehicles and sustainable energy is theoretically sound but fails to consider immediate consumer realities.
For many citizens in Ireland, petrol and diesel are essential, not discretionary, expenses. Commuting, transporting goods, and heating homes rely heavily on these fuels. This was evident when, despite record-high fuel prices post-Ukraine crisis, fuel sales volumes did not significantly drop.
Likewise, the lack of comprehensive engagement with the fuels industry by the government has led to a policy approach disconnected from market realities. The current strategy, relying on escalating fuel taxes, risks creating a two-tier fuel economy, disadvantaging consumers in the Republic and threatening economic stability in border regions.
The government has recently confirmed that the planned excise duty for August will be kept under review, and we encourage them not to proceed with it.
Balanced approach
A balanced approach is necessary—one that considers both the long-term goal of transitioning to sustainable energy and the immediate needs of the population. Fuels for Ireland advocates for the establishment of an Expert Group on Taxation. This group should include representatives from government, Revenue Commissioners, economists, environmental experts, business leaders, social groups, and the fuels industry. Together, they can develop a nuanced fiscal policy that supports the energy transition while ensuring fuel affordability.
Key Factors
Key factors that this Expert Group should consider when shaping fiscal policy on energy include:
- Exploring the potential of low-carbon and renewable liquid fuels as intermediate steps toward sustainable energy.
- Protecting the revenue generated from the fuels industry for the state, and assessing the broader economic implications of fuel taxes.
- Ensuring that policies do not disproportionately burden households already struggling with high living costs.
Expert Advisory Group
Fuels for Ireland believes that an expert advisory group made up of a broad array of sector stakeholders would be best placed to produce a series of recommendations for the Minister for Finance. This would ensure that our fuel industry and the people of Ireland are protected from unnecessary price increases that are out of touch with the realities of the market and ultimately do more harm than good.
Our organisation wholeheartedly supports the transition to net-zero and recognises the need for an environmentally sustainable future. However, higher and higher taxation on fuel, resulting in increased costs for consumers, is not a magic bullet for achieving this. Greater collaboration and broader input into policy decisions are essential to achieving a positive outcome for Irish consumers and society at large.
Expert Group
Establishing an Expert Group on Taxation would be a significant step towards a more balanced and informed approach to fiscal policy on energy. This group would ensure that our fuel industry and the people of Ireland are protected from unnecessary price increases that do more harm than good. It’s time for the government to engage fully with all stakeholders to navigate the complex landscape of energy transition, ensuring a fair and sustainable future for all.
