There have been renewed calls for a reduction in fuel taxes, following new highs in the price of oil on fears of supply shortages. It hit $44 (€36.50) a barrel, yesterday and some analysts believe it could even rise as high as $50 per barrel by the end of the year.
Yesterday's jump in oil prices came after Purnomo Yusgiantoro, Indonesia's energy minister and president of the Organisation of Petroleum Exporting Countries (OPEC), said: "The oil price is very high, its crazy. There is no additional supply."
The chairman of the Consumer Association of Ireland, Mr Michael Kilcoyne, said that petrol and diesel prices were already "at the highest they've ever been here" and 63 per cent of the price "is taxation of which 5 cents was added last December in the Budget".
Mr Kilcoyne also called for the competition authority to investigate the oil industry because it "is controlled by too few hands for any real competion".
A spokesman for Finance Minister Mr McCreevy said the issue of taxes was a budgetary matter and the Minister had already said that excise duties were relatively low compared to other EU countries.
He said the issue would have to be considered as part of the next Budget.
US crude oil futures hit a new 21-year high of $44.24 inovernight trade before easing slightly during the regular session. On the New York Mercantile Exchange, crude oil for September delivery settled yesterday at $44.15 a barrel, up 33 cents.
Irish Shell, the only petrol company to comment on the latest increases when contacted, would only say that "Shell will continue to offer competitive prices".
While some petrol stations have charged over €1 a litre for petrol many have been reluctant to break that "watershed".
One petrol station operator, a Maxol licensee said that once the majority of stations go over the €1 "it will be very difficult to bring it back".
Mr Raymond Hammond, who with his brother Rory, operates a Maxol station at Walkinstown Avenue in Dublin said that "the competition has gone out of the petrol market".
He is selling petrol at 99.9 cent a litre, "and in fairness to Maxol they have been subsidising that price", because the recommended retail price was €1.08 or €1.09. "Their margin has been hit and they can't keep subsidising the price," he said.
The Hammond brothers have been running the station for almost two years and in that time petrol prices have risen from 79.9 cent a litre to 99.9 cent.
The AA, which monitors petrol and diesel prices, noted a drop in average prices last month. Unleaded petrol decreased from €1.004 a litre in June to 98.3 cent in July while diesel went from 91.6 cent to 88.6 cent and super unleaded was reduced from €1.096 in June to €1.078.
Calling for the Competition Authority to investigate oil companies, Mr Kilcoyne said "we believe that they are deliberately keeping the price high".
He said that oil was bought and sold in dollars and when the euro strengthened by nearly 30 per cent against the dollar, fuel prices should have dropped with the "huge savings", but that was not passed on to the consumer.
Meanwhile, figures released yesterday showed US consumer spending dropped 0.7 per cent in June, the biggest fall since September 2001. The Commerce Department released the monthly data underlying its advance estimate of second-quarter gross domestic product.
Government statisticians estimate that the US economy grew at 3 per cent in the second quarter, slower than expected, owing to a 1 per cent rate of growth in consumer spending.
Consumer spending was dragged down by the June decline.
However, the Commerce Department said most of the decrease in consumer spending in June was the result of a decline in the sale of vehicles and car parts, a volatile factor in recent months.
The Federal Reserve has said weaker consumer spending in June was partly explained by higher energy prices, and that the slowdown should prove short-lived. Data from July suggest economic activity rebounded last month. - (Additional reporting, Reuters, Financial Times Service)
