Rural families and low-income earners are hit hardest by rising fuel prices, a new report finds

It also reveals the impact that significant increases in fuel consumption and CO2 taxes have had on the price of petrol and diesel at the pump.

According to the report, taxes and subsidies now account for around 62 percent of gasoline prices and 58 percent of diesel prices.

Despite a temporary reduction in excise duties of 20 cents per liter on gasoline and 15 cents per liter on diesel introduced in March, sharp increases in global fuel prices have boosted government tax revenues.

In June 2022, the government took 7 cents more per liter than in June 2021, 27 million euros more per month.

Grant Thornton’s report found that “considering these fuel price hikes combined with recent increases in the price of utilities such as electricity and gas, consumers have faced a significant increase in their cost of living”.

It suggested that given the prevalence of ‘traditional’ car ownership and the lack of viable alternatives currently available in Ireland, consumers generally remain ‘inelastic’ to increases in fuel prices.

Currently, 97 percent of the cars here are either petrol or diesel, only 0.48 percent of the cars are fully electric.

The report found that while electric cars are becoming increasingly attractive, petrol and diesel vehicles will remain the main means of transport on Irish roads in the short to medium term.

In particular, the report pointed out that those living in rural areas are the most “inelastic” to increases in fuel prices, given their lack of access to public transport and their reliance on cars.

It identified the most vulnerable group as low-income rural residents, the cohort most sensitive to increases in fuel prices.

Michael Kilcoyne, Chair of the Consumers’ Association of Ireland, said the unique challenges faced by motorists in rural Ireland are being forgotten.

“There’s no luas or darts for anyone in rural Ireland,” he said.

“There is absolutely no doubt that people in rural Ireland are the hardest hit by fuel costs.

“If you don’t have a car, you’re stuck at home – you can’t go to work, you can’t take your kids to school.

“The TDs from the rural constituencies don’t seem to be saying that enough.

“People are seeing their incomes wiped out between fuel and rising rents.

“Outside the cities there is no rent control and thousands of families are on the brink.

“If the government doesn’t introduce a rent cap in rural areas, working people will become homeless.

“It’s terrible what I hear about people in crisis.”

Kevin McPartlan, chief executive of Fuels for Ireland – the industry body that commissioned the report – said the findings underscored limitations in the Government’s approach to fuel taxation.

“This study confirms what many of us have suspected by showing that consumers generally remain ‘inelastic’ to increases in fuel prices.

“Given that the vast majority of vehicles run on liquid fuel, and given Ireland’s disproportionately rural nature and lack of alternative transport options, this policy of steadily increasing taxes does not really reduce fuel consumption.

“What it does is bring real hardship to people. Grant Thornton’s review clearly showed that lower-income rural residents are the most inelastic to increases in fuel prices.

“Meeting people with the least ability to pay and no available alternatives is totally contrary to the principles of a just transition,” he said.

The report also revealed that Ireland has one of the highest taxes and levies on diesel – with France, Belgium and Italy being the only European Union countries where diesel has been more heavily taxed.

Mr McPartlan said the government should review fuel taxes without delay to bring revenues back in line with expected revenues.

“Be it by reducing VAT or excise duty, or by adopting a dynamic approach to carbon tax rates, the Government must act urgently to ease the burden on Irish motorists,” he said.

But he added that longer term, there needs to be a broader reassessment of the state’s energy and climate policies, focused on easing pressure on disadvantaged consumers while accelerating the transition to carbon neutrality.

“Private road transport will be critical for many years to come, and it is time the government considered the full range of transport decarbonization options – including biofuels, hydrogen and other low-carbon alternatives – and incentives to do so their recording.”