Minister Signals Possible Action on Rising Fuel Costs, Carbon Tax Unchanged

The Irish government may take measures to mitigate the rising costs of petrol and diesel, according to Thomas Byrne, Minister of State for European Affairs. Speaking on RTÉ’s The Week in Politics, Byrne indicated that while the government is considering options, any reduction in the upcoming carbon tax would be “the last thing” he would advocate.

The backdrop for this discussion is the recent military conflict involving the United States and Israel’s actions against Iran. This has sparked concerns over the security of the Strait of Hormuz, a critical maritime route through which approximately 20% of the world’s crude oil is transported. The strait, measuring just 21 miles wide, has become a focal point for global oil supply disruptions, affecting markets far beyond the region.

In Ireland, the price of fuel has surged, with many filling stations reporting prices exceeding €2 per litre for both petrol and diesel. Although Ireland primarily sources its oil from the North Sea, the increase in global oil prices has been significant, reflecting the uncertainty surrounding shipping routes. The government has been urged to consider reducing some of the taxes levied on motor fuels to alleviate the financial burden on consumers.

Motor fuel in Ireland is subject to heavy taxation, with approximately 65% of the cost of petrol and 60% of diesel attributable to taxes. These include excise duties, carbon tax, and a value-added tax (VAT) set at 23%. Additionally, there are specific levies such as the better energy levy of 8 cents per litre and a 2 cents per litre charge from the National Oil Reserves Agency.

In response to escalating fuel prices following the Russian invasion of Ukraine, the government had previously implemented temporary reductions in excise duty, cutting prices by 20 cents on petrol and 15 cents on diesel for a limited period. However, the scheduled increase in carbon tax from €63.50 to €71 per tonne is set to take effect on May 1, 2026.

Byrne emphasized the necessity for careful consideration of the situation, stating, “It may well be that the Government will take action. I think the Government is going to look carefully at this – clearly, prices have gone up.” He warned that the repercussions of the conflict in the Middle East could extend beyond fuel and electricity to impact food supplies as well.

Despite the pressure to address fuel prices, Byrne remains firm on the importance of the carbon tax, highlighting that it funds essential programs, such as fuel allowances and home retrofitting initiatives designed to help consumers manage their energy costs.

The government plans to monitor the evolving situation over the next week, with Byrne noting that the Competition and Consumer Protection Commission has been tasked with investigating the recent spikes in fuel prices. “I think the Government is open to examining supports that we could give, but there need to be supports that people will directly benefit from,” he added.

As the situation develops, the public and industry stakeholders alike await further announcements from the government, particularly regarding any potential adjustments to taxation and support measures.