Mr. Kevin McPartlan:

I thank the Chair, the clerk to the committee and the committee for inviting us. Fuels For Ireland is the representative body for the fuel sector in Ireland. This industry employs more than 13,000 people in filling stations alone and provides a similar number of jobs in support functions. It is an industry that collects in excess of €3 billion in taxation on behalf of Government each year. It is working hard to meet our shared objective of carbon neutrality by 2050. Fuels for Ireland members currently provide 50% of Ireland's total energy needs.

During all the public health restrictions designed to protect us from Covid-19, our people continued to show up to work day after day, providing the products on which this country relies for transport, heating and business. Russia's appalling and brutal invasion of Ukraine has created significant challenges for our industry, but we were already in challenging times, particularly with high international commodity pricing. Demand was already outstripping supply as the world emerged from Covid-19. Demand from China in particular spiked very sharply. The Organization of the Petroleum Exporting Countries, OPEC, refused to increase production and the sanctions imposed on Iran were all having a serious impact, which was reflected in high wholesale prices for fuel products in the months prior to 24 February. In the days preceding Russian aggression, we had three severe weather events in Ireland that prevented or delayed cargoes of fuel being unloaded.

Coming into February, ahead of the tragic invasion of Ukraine, we had two specific problems. There was a pinch on supply, with less than we would have liked in stock due to unusual weather events. Second, there were rising international wholesale prices. On top of these pre-existing challenges, the tragic invasion of Ukraine occurred and caused extreme volatility within our market and our industry. This was by no means unique to Ireland.

Over many years Europe has developed a massive reliance on Russia for its energy. Some 29% of the gas used in the EU and 35% of oil products came from Russia. Despite the lack of formal sanctions, many companies, including Fuels for Ireland members, unwound themselves from contracts with Russian suppliers. This effectively reduced the supply to the global and European oil markets. In addition, many countries that had used Russian gas for electricity generation switched to oil and thereby created a massive increase in demand.

While wholesale fuel prices have fluctuated since Russia’s invasion of Ukraine, the overall trend has been significantly upward. In the 13 days between the start of the conflict and the Government announcing an excise duty reduction, the wholesale market prices had increased by 26 cent per litre on gasoline and 45 cent per litre on diesel. When VAT is applied, petrol ultimately cost Fuels For Ireland members 32 cent more per litre, and diesel 55 cent more per litre to bring to consumers. While the excise duty cuts succeeded in blunting the price rises, they were never going to entirely eradicate or reverse them. Recent weeks posed significant challenges regarding prices, but also in the availability of product.

Fuels For Ireland members have worked hard to ensure stability of supply, but there has been much ill-informed commentary on stocks held. The reality is that, while we have always maintained supply, there has never been the abundance of fuel in Ireland that some commentators have repeatedly and wrongly claimed. To illustrate this point, in the six months prior to January 2022, the maximum commercial stock of fuel products, including crude oil at the refinery, that was held at any point in Ireland was sufficient for 19 days. In the aftermath of the invasion of Ukraine, there was a point where there was only one day of commercial stock of diesel held in terminals at Dublin Port. Fuels for Ireland members have had to manage stock responsibly, even when that meant having to impose maximum volume limits for orders from bulk fuel customers. We have been consistently rebuilding stocks to normal commercial levels, but that means buying fuel at high wholesale prices. Wholesale prices were already increasing prior to the unjustified invasion of Ukraine and the levels of commercial stock were nowhere near the levels that were being widely reported. We must also recognise that the oil in storage has to be replenished and built up to normal levels and that replenishment has to happen at the wholesale rate on a given day.

We have worked with the Government and the National Oil Reserves Agency, NORA, to ensure that there is security of supply to Ireland throughout this period. While NORA keeps a minimum of 90 days stock of oil to be deployed in the event of a supply shortage, this may only be released by order of the Minister for the Environment, Climate and Communications. Even then, it is released at market rates. NORA, and its strategic fuels stocks, does not render the Irish market immune to international price spikes. At each step along the way, we have worked with NORA and a number of Departments to ensure that there has been clarity on fuel supply levels. We are grateful to officials from the Departments of the Environment, Climate and Communications and Transport and NORA for their determined efforts and deep engagement with industry to maintain security of supply. Despite the system coming under pressure at various points, we have ensured fuel has flowed to consumers and businesses, and assuming normal consumer behaviour, we are completely confident that this will continue.

This is the backdrop against which we have seen these price rises and, while it is encouraging to see respite on market prices in recent days, it is important to stress that further price volatility could occur. It may well be beyond our control. There has been great mischaracterisation of the work of the industry during this deeply uncertain time, and we are unhappy over how things have been portrayed in recent weeks, not least the inference that the industry has been engaged in any sort of profiteering. This is simply not the case.

This inference has come in addition to repeated messaging that the excise duty reduction, welcome though it was, would take effect from midnight on the night the reduction was announced. This could not possibly have happened. As was flagged by industry to Government in advance, excise had already been paid on supplies that were on forecourts at that point. It gave people a false impression that prices would reduce immediately and caused anger and frustration that was often directed at our colleagues. In the two days prior to the excise duty cut, the wholesale price of diesel according to Platts increased by approximately 20 cent per litre, while the excise duty decreased by 15 cent per litre. The effect of the excise duty cut was no more than a partial neutralisation of the price increases that had occurred in the two days before it was announced.

Further fiscal interventions seem likely to remain under consideration, including changes to VAT, which is applied to excise, levies and tax on fuel as well as the product itself. We ask that industry be involved in discussion of such policies to prevent similar misunderstandings to those that arose regarding the excise duty cut. Given the topic of this session is the rising cost of fuel, we need to recognise that this issue is not a short-term concern just borne out of the current tragic situation in Ukraine, but rather something that is more systemic and long-term. It is the policy of successive Irish and many other international governments to reduce the capacity to produce fuel and, ultimately, increase the price of fuel to consumers. This is justified by claims that by driving prices higher, demand for fossil fuels will drop, despite unrelentingly consistent and conclusive evidence to the contrary.

The reality, as shown in AA Ireland statistics, is that the price of fuel rose by 34% in the year to February 2022. This is the highest level of price change on record and, according to analysis of data in a soon to be published Grant Thornton report, some 62% of comprised taxes and subsidies. This proves the earlier point on price volatility leading into the present challenge and the level of Government taxation on fuels.

Our focus is on powering today and tomorrow. Fuels for Ireland and its members have made an unequivocal commitment to achieve carbon neutrality by 2050, not just for our own companies but to support Ireland in meeting this objective. We have repeatedly stated that fossil fuels cannot be the basis for Ireland's future energy plans or the business strategies of our members. We have already invested in EV charging networks that mean a greater proportion of Irish forecourts provide charging points than any other European country. We have spent years urging Government to double the biofuel component of petrol and are part of an industry that is investing its brightest minds and billions of euro into developing low- and no-carbon liquid fuels.

We talk of a just transition, but it often seems that we expect to switch fully from one state to another with no steps along the way. This risks leaving great swathes of people and businesses in Ireland behind. To pursue a policy of strategically increasing the price of fossil fuels in the belief that this will drive all toward EVs or heat pumps ignores the fact that those least able to bear the high entry costs to these technologies are those hardest hit by high fuel prices. With our focus on supplying the energy we need today and tomorrow, we believe there should be no penalties without realistic alternatives.

Analysis of the impact of Government fiscal and environmental policy on demand for fuel will soon be published by Grant Thornton. It will report that a price rise in fuel is more likely to impact deprived households and that rural dwellers on lower incomes are the most inelastic to fuel price fluctuations, needing to compromise on other spending to cover these price rises. In the context of this meeting and of the soon to be published report, it is our view that Government policy on fuel taxation should be comprehensively reviewed.

We welcome this opportunity to engage with the committee about how best we can continue to play our role in ensuring stability of supply and clarity on pricing and will always make ourselves available to Oireachtas committees and individual Members to inform political discussion on our sector.