Petrol crisis a recurring consequence of war
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That summer coincided with one of the periodic outbreaks of hostilities in the Middle East, which led to a temporary shortage of oil.
My main job in the garage was to fill cars with petrol and diesel. If it wasn’t too busy, I would have the tedious job of waxing and polish the new Mini Minors, Austin Allegros and Rovers – it was the main dealer for British Leyland.
When the shortage materialised, the boss started rationing petrol, as fewer tanker lorries were arriving to fill the tanks.
As far as I can recall, the best customers — those with massive cars such as the Rover 3500— were entitled to a full tank of petrol. Those with more modest cars, such as a Mini Minor or Morris Marina, received smaller amounts.
Memory can play tricks, but I do remember some customers being limited to 50p worth of petrol. It sounds ridiculous now, but that was over 40 years ago, and at least it gave them something. I’m sure petrol was only a few cents a litre at the time.
Anyone who arrived looking for petrol, and wasn’t known to the garage, was politely told by me — a not very authoritative 15-year-old — that I couldn’t serve them unless they were an existing customer.
For some reason, all of this came back to me over the past week, with talk of energy shortages, rising oil prices and potential supply issues as the war involving Iran, the United States and Israel grinds into its fourth week.
What was expected to be a short, sharp campaign now looks increasingly uncertain and could go on for months, with no clear outcome.
It’s unclear how Benjamin Netanyahu persuaded Donald Trump to enter the conflict. One possibility is that it was made personal, with reports of an alleged Iranian plot against Trump.
Given his personality and vanity, that may have been the decisive factor that swayed him. L’etat, c’est moi and all that. It was an unprecedented move in modern democratic history for one country to decide to go in and participate in somebody else’s war.
There is also a view that Israel believed removing Ayatollah Khamenei would quickly lead to regime change. That has not happened.
Instead, the Iranian regime — however unpopular — has proved more resilient than expected and there is no sign that it is vulnerable or about to topple.
It also appears Iran had long prepared for such an attack, knowing it could not match US or Israeli military power directly. Instead, it has turned to asymmetric tactics: targeting Gulf states hosting US bases and focusing on economic pressure, particularly oil.
At some point, Trump is likely to declare victory. However, it will almost certainly fall short of that. Many will question what has been achieved beyond significant loss of life and widespread destruction.
At some point, Trump is likely to declare victory. However, it will almost certainly fall short of that. Many will question what has been achieved beyond significant loss of life and widespread destruction.
As we have seen, disruption to oil supplies passing through the Straits of Hormuz would have serious consequences, not just for Iran’s adversaries but for Western economies generally. There is little appetite among other Western countries to become involved in what many see as a conflict they neither support nor wish to participate in.
At some point, Trump is likely to declare victory. However, it will almost certainly fall short of that. Many will question what has been achieved beyond significant loss of life and widespread destruction. Anything short of regime change is unlikely to be seen as a clear victory for either the US or Israel.
For the moment, the immediate domestic concerns are the twin perils of rising energy prices, and the possibility of oil shortages.
Within days of the conflict beginning, the price of Brent crude rose above $100 a barrel. Although it dipped briefly, it has since climbed back to those levels again. This is already being felt at the pumps, with diesel now costing around €2.10 per litre, up from about €1.70 just a month ago.
Many Irish households rely on home heating oil (far far more than our counterparts in other European countries). While we are past the coldest part of the year, a prolonged conflict will still bring significant additional costs for those dependent on oil.
So far, the Government has not intervened, but that may change soon, certainly by the middle of next week.
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In 2022, following Russia’s invasion of Ukraine, it initially waited before acting, then reduced excise duties — cutting petrol by 21 cent per litre and diesel by 16 cent.
Households also received a €200 payment to help with energy costs, which later became a regular budget measure before being withdrawn last October. The reductions in petrol and diesel prices were also phased out, ending in October 2024.
In recent weeks, opposition parties have called for a reduction in carbon tax and also for the planned increase in that tax be scrapped. The Government has ruled this out, meaning a rise of €7.50 per tonne of CO2, or about 2.5 cent per litre, is still expected in May.
There have also been suggestions to review the reduced VAT rate for hospitality, due to fall from 13.5% to 9% in July. It would lead to savings of €680 million per annum. However, that’s not going to happen. It was a Fine Gael priority in the Budget last October and any effort by Fine Gael to walk it back will lead to civil war within the Coalition.
What seems more likely is action on excise duties, similar to 2022. A cut of around 20 cent per litre on petrol and diesel is possible, along with the potential return of electricity credits this winter if energy prices remain high.
The memories of that summer in the garage, rationing petrol and turning customers away, don’t feel quite so distant after all – except for the ‘50p fill’.
Harry McGee is political correspondent of the Irish Times.
