Mere 5c/l tax cut to green diesel is an ‘insult’, as prices surge 67% in weeks

On Tuesday, the Government announced a temporary two-month reduction on the taxation of fuels, namely excise duty and the pausing of the National Oil Reserves Agency (NORA) levy, cutting 5c/l off the price of green diesel.

Since the US and Israel launched air strikes on Iran at the start of the month, fuel prices have spiralled out of control with green diesel, or marked gas oil (MGO), being hit particularly hard.

Over the space of the three-week period green diesel prices have risen by as much as 66c/l or 67.3%.

At the time of printing, prices for bulk orders of green diesel were ranging from €1.51/l to €1.64/l including VAT, up from 96c/l to €1.00/l before the war broke out.

Government measures

Tuesday’s announcement, aimed at helping overcome increasing fuel costs, included tax cuts of 17c/l and 22c/l respectively on the price of petrol and white diesel.

Green diesel, despite rising over 67% in price since strikes began, got the thinner end of the wedge, receiving a much smaller tax cut of 5c/l.

Making up the 5c/l cut, was a 3c/l reduction in excise duty and the pausing of the NORA levy which added a further 2c/l.

Meanwhile, petrol and white diesel received a 15c/l and 20c/l reduction in excise duty before adding on the 2c/l NORA levy relief.

An insult to contractors

According to Ann Gleeson Hanrahan, managing director of the Association of Farm & Forestry Contractors in Ireland (FCI) , the excise duty and NORA levy reductions announced this week – resulting in a mere 5c/l reduction for agricultural contractors – is an insult at a time of huge diesel cost increases.

“The additional diesel costs to our sector are in the region of €224 million based on today’s prices, making the delivery of many agricultural and forestry contractor services unsustainable,” she told the Irish Farmers Journal.

This Government seems to be oblivious to the plight of the agricultural and forestry contractor sector

Gleeson Hanrahan said that a New Holland T7.210 – described as an average contractor’s tractor – now costs an additional €210/day to fill with diesel. For a self-propelled silage-cutting outfit, the additional cost is approximately €2,855/day, based on an average of 100 acres.

“This Government seems to be oblivious to the plight of the agricultural and forestry contractor sector, that seems to be invisible to everyone in Irish agriculture, that is until the vital services that they provide become unavailable,” she added.

“If crops remain unsown this spring and silage crops unharvested, due to unsustainable and unsupported agri-diesel prices, then the very foundations on which the multi-billion Irish food exports are based, will crumble without the work of Irish agricultural and forestry contractors.”

Brent crude

Brent crude, the global benchmark for oil prices, faced a turbulent start to the week, reaching highs of $114/barrel on Monday morning which later dropped to as low as $100/barrel on Monday evening, following US President Donald Trump’s comments regarding ongoing negotiations with Iran.

Despite these comments being later dismissed by Iran, Brent prices did hold closer to the $100/barrel mark on Tuesday. At the time of writing, Brent was trading at $102-$103/barrel, roughly on par with the same day last week.

However, Brent is up significantly from where it was three weeks ago before the conflict began, when it was trading at $70-$72/barrel.