Ceisteanna — Questions. Oral Answers. - Road Diesel Price.

James Leonard


4 Mr. Leonard asked the Taoiseach the increase in the price per gallon of road diesel oil from 1 January 1995 to date. [1098/97]

The consumer price index compiles average retail prices on a quarterly basis. Based on these average prices the increase in the retail price per gallon of road diesel between mid-February 1995 and mid-November 1996 was 29.2p. This period is the closest available to that requested.

Has the Minister the figure from January 1995 to the middle of 1995, a time of substantial increases?

The figure I gave applies from mid-February 1995 to mid — November 1996. Up to now the prices have been compiled on a quarterly basis, in February, May, August and November. As regards the factors that make up the 29.2p increase in a gallon of road diesel, in the budget of 1995 there was no increase in excise duty, in the budget of 1996 it was increased by 4.546p per gallon, or 1p per litre, in the budget of 1997 the increase was 6.819p per gallon, or 1.5p per litre. One may ask where does the disparity arise between the increase by way of excise duty and the actual increase. During that period account must be taken of Brent crude oil prices, the price increase per dollar per barrel. The percentage increase year on year in the price of crude oil for September to December from 1995 to 1996 is as follows: the price of crude oil went up by 35.54 per cent in September, by 50.17 per cent in October, by 34.9 per cent in November and by 32.73 per cent in December. The highest increases in the price of crude oil occurred in those months, the average increase being 44.01 per cent. Those figures together with the increase in excise duty help explain part of the increase in the price per gallon of diesel.

If the Minister of State were to compare the price of diesel here with prices in Northern Ireland and England, he would acknowledge the last price increase has created serious problems for the haulage industry which faces intense competition from large organisations. If one had held a clinic in my area last weekend, attention would have been drawn to the problems created by the last price increase under the budget.

I understand the position in the Border areas is the opposite to what it was a number of years ago when there was wholesale closure of petrol and diesel retail outlets and service stations along the Border. We saw the skeletons of service stations that were once thriving, commercially vibrant, entities. Many of those outlets south of the Border have now reopened and the position that applied a number of years ago has been replicated north of the Border where petrol stations have closed because we, on this side, have a competitive advantage. I do not have the relevant figures. The Deputy is living in a Border country and I am aware from my occasional incursion across the Border that petrol stations and service stations generally which were non-active are reopening. That would seem to reflect that the price differential had swung in favour of southern retail outlets as against northern retail outlets.

The House must proceed to deal with priority questions shortly.

The Minister of State is correct in saying that petrol stations along the Border were closed in 1987 following a period when Fine Gael and Labour were in Government. The position was reversed thanks to the decision taken by the former Deputy MacSharry. As Deputy Leonard said, people are no longer crossing the Border to buy petrol and diesel. Given the substantial increases in the price of crude diesel oil outlined by the Minister of State, does he accept that a prudent Government, having regard to competitiveness in business, the Border area and tourism, would not have increased the price of crude oil but reduced it as our leader did when, as Minister for Finance, he reduced the price of petrol by 9p a gallon in the 1992 budget?

Having regard to the time limit, I suggest we hear Deputy's Walsh's question and the Minister of State may reply to both questions together.

Has the Minister of State calculated the likely inflationary impact of the increases as petrol and diesel are an energy source for virtually every economic and industrial activity in the country?

On Deputy O'Hanlon's point about the need to enhance the attractiveness of economies in Border regions, that was one of the factors taken into consideration by the Government in the 1995 budget under which there was no increase in excise duty. Nobody could say that a 4.5p increase in the wake of no increase in 1996 was exorbitant. In calculating the level of excise duty that will be imposed on diesel, alcohol and tobacco, the Government takes cognisance of the likely cross-Border effects, given that another economy operates to different standards on our land frontier. That forms part and parcel of the logic that determines how a budget is framed. The Government has been particularly conscious of that. As a result, in terms of it being attractive to people to travel across the Border, we have enhanced considerably the prospects of people travelling south and reversed the flow that was the norm up to a few years ago.

Regarding Deputy Walsh's question on the likely impact of the increase on inflation, as I said in reply to a question from the Leader of Fianna Fáil, we do not have that figure and we must wait until the relevant figures are available to determine that. We operate on the basis of past experience and what the figure is likely to be, but we do not have that figure now because the budget was only framed and presented to the House two weeks ago.

That concludes questions to the Taoiseach. We will now proceed to deal with questions nominated for priority to which a time limit applies.