asked the Minister for Industry Trade, Commerce and Tourism if, in view of the agreed price reductions of petroleum by OPEC, he will consult the appropriate oil companies in this country so as to ensure that these reduction will be reflected in reductions to oil/petroleum product consumers; and if he will make a statement on the matter.
Written Answers. - Petroleum Product Prices.
400.
The recent price reductions announced by OPEC related to official selling prices for certain grades of crude oil exported by those counties. As Irish prices are currently in the main based on the much lower international market or `spot' prices for product the minor adjustments now being made in OPEC official selling prices can have no immediate impact on petroleum product prices here.
I should explain that, apart from the crude oil refined at Whitegate, oil supplies to the Irish market are imported in product form, for example as petrol gas oil, etc. Up to mid 1984 a substantial part of the imported product was costed on the basis of official selling prices but by that time the National Prices Commission had concluded that this basis was no longer a reliable indicator of the price at which oil products were being actually traded internationally. Following my acceptance of the commission's recommendation which is outlined in detail in their report for March 1984, a new price control system was introduced on 20 June 1984. Since then maximum prices for petroleum products insofar as they reflect the cost of imported product, have been based on the international market or `spot' prices and adjusted monthly on the basis of movements in the `spot' prices. Details of the monthly adjustments are described in the commission's monthly reports which are available in the Dáil Library. Would add that since the new arrangements were introduced the `spot' market product prices in US dollar terms, on which the Irish maximum prices are partly based, have been consistently lower than official selling prices by percentages ranging, it is estimated from 8 per cent in July 1984 to 15 per cent in January 1985, or 13 per cent if the current reduction in the OPEC official selling price of Arab light crude oil is taken into account.
In effect the OPEC peice adjustments can be seen as a response to the substantial dollar price reduction that have occurred in recent months in international `spot' market prices. These reductions have of course already been reflected in Irish maximum prices. As the OPEC adjustments will have the effect of reducing the current differential between spot product and official crude prices by only a small percentage, I see no reason to change the more favourable formula on which Irish prices are calculated.
As the Deputy may be aware, the higher cost of Whitegate products, which provide 35 per cent of our requirements of petrol and gas oil, is also reflected in the maximum prices fixed for these products by way of a specific addition in the maximum prices build-up. While a substantial part of the Whitegate cost is based on official selling prices, these costs have already been adjusted to reflect the recent North Sea price adjustment.
I should also emphasise that the OPEC prices are fixed in dollar terms and that any reductions that may have occurred in those dollar prices have been more than counterbalanced in Irish currency terms by the rise in the value of the US dollar. The following was the position at each of the most recent changes in the official selling prices of Arab light crude.
|
Date |
$ Prices per Barrel |
Exchange Rate of IR£ |
IR£ Price per barrel |
|
December 1980 |
£32 |
£1.89 |
£16.93 |
|
October 1981 |
£34 |
£1.57 |
£21.66 |
|
March 1983 |
£29 |
£1.35 |
£21.48 |
|
February 1985 |
£28 |
£0.98 |
£28.57 |