This week has seen petrol prices top €1.70 a litre in many locations, which is by far the most expensive it’s ever been. Even if you only ride your bike on the weekends, you can’t have failed to notice the increases when it comes to filling up.
So what’s going on? We’re told that there has been an increase in the price of crude oil lately, and there has, but there’s much more to it than that. First let’s take a quick look at the price of brent crude oil over the past five years to get a little perspective on where it’s at and where it’s going.
Brent Crude Oil Price, 5 Year Chart, Source: Nasdaq
As we can see from the chart, crude oil prices fluctuate significantly over time, but are substantially lower than the peak price in mid 2008 when we were paying around €1.33 per litre. Clearly then, the price of crude oil is only a small part of the problem.
When we look a little closer at the underlying causes, we begin to see the real culprit – fuel duties. According to the price tracking web site pumps.ie, the current average price is 169.9 of which the Government takes over 91 cent in direct and indirect taxes.
Petrol Price Breakdown 23/08/2012 – Source pumps.ie
This view is shared by the motoring lobby, where Conor Faughnan, Director of Policy, AA Ireland had this to say on the AA blog abut the cause of the recent increases;
There are three distinct reasons. Firstly, there is the rise in oil prices. This fell back a bit during May and June but has turned upwards again.
Secondly, there is the value of the Euro which is down by 16.5% since this time last year.
But let’s not forget that the biggest reason is Irish taxes. Since October 2008 successive tax increases have added 20 cent per litre to both fuel. We are feeling the full pain of that now, which is hitting family budgets and damaging the economy. Some 57% of the retail price of petrol is tax and that must come down.
MAG Ireland understands that many riders are already facing an uphill battle to keep their bikes on the road with the latest round of fuel price increases only adding to the burden. However much (or little) you ride, it’s difficult to escape the consequences of soaring prices, but there are a couple of things which can help cut the cost, even if only a little, regardless of what bike you ride.
First, shop around – use web sites like www.pumps.ie (or their smartphone app) to keep an eye on prices. Second, check your tyre pressures – under inflated tyres ruin the handling of your bike, but also burn more fuel. Finally, keep your bike maintained – a clogged air filter does nothing for your fuel consumption.
None of us want to pay any more than we have to. It’s up to us to make sure we don’t.