Bernard Durkan
Ceist:231. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which his Department monitors the economic impact of energy costs; and if he will make a statement on the matter. [5003/15]
Amharc ar fhreagraTuesday, 3 February 2015
Ceisteanna (231)
Freagraí scríofa
My Department monitors and advises on all developments that can impact on the economy, including oil price movements. The price of Brent crude oil has fallen by about 45 per cent in euro terms (nearly 50 per cent in US dollar terms) since the end of September, when the macroeconomic projections that underpin Budget 2015 were finalised. For the most part this is a positive development, and will likely have a favourable impact on real economic activity in Ireland.
Ireland is a net energy importer and, as such, falls in oil prices have a positive impact in the short term. Lower energy prices reduce firms' input costs, thereby improving profitability and competitiveness. At the household level, lower energy prices are likely to lead to an increase in real disposable incomes through lower inflation and this can help people to reduce indebtedness or increase consumption on other goods and services.
In terms of quantifying the impact, a reasonable rule of thumb is that, everything else being equal, each sustained €10 per barrel reduction in the price of oil boosts the level of real GDP by somewhere in the region of 0.1 to 0.2 percentage points.