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Irish Times: Shell raises prices as oil breaks record

Shell raises prices as oil breaks record
Irish Times; Apr 20, 2006

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One of the Republic's biggest oil companies increased fuel charges yesterday as crude prices hit new highs on international markets, writes Meg Shreve and Barry O'Halloran

Oil prices overtook $74 a barrel yesterday, breaking another record. In London, Brent crude jumped 95 US cent to $73.46, while in New York it hit $74.12 a barrel.

Shell Ireland added 1.55 cent to the cost of a litre of premium unleaded petrol and 1.85 to the cost of diesel at the pumps.

The prices paid by motorists at each of Shell's 150 outlets around the Republic vary, as many of them are run by owner managers.

However, as most cars have 40 litre petrol tanks, it means that the average motorist will pay an extra 62 cent each time they fill up in a Shell forecourt.

Statoil, another one of the big players, has yet to increase its charges. The company said that it was monitoring the situation.

A spokeswoman explained that there was normally a time lag between an increase in crude prices and one in motor fuel charges. She added that supply and demand determined its pricing policy. Statoil charges 1.11 a-litre and 1.13 a-litre at its 70 company-owned service stations around the country.

A Department of Finance spokesman yesterday ruled out any prospect of a cut in duty on motor fuel.

A number of groups, including the Irish Road Haulage Association (IRHA), have called on the Government to cut excise on diesel and ease the pressure on the cost of transporting goods in and out of the State.

The Government has the scope to cut up to 65 in duty from the cost of filling an articulated truck fuel tank with diesel. Currently it takes 367 from the full cost, but the IRHA says it can reduce this to 302.

The department's spokesman said that such a move was unlikely. “Any changes in taxation are only going to be considered in the context of the Budget,” he said.

Between duty and VAT, the State takes a considerable cut from motorists. At an average of 1.12 a-litre for petrol, the Government gets 17.72 in duty and a further 9.40 in VAT every time someone fills a 40 litre tank. This brings its share of the total 44.80 cost to 27.12, almost 65 per cent.

Commercial operators are allowed to claim back VAT, but have to pay duty.

The indications were yesterday that oil prices are likely to continue increasing. The crisis has been sparked by the ongoing hostilities between the US and Iran over the Islamic Republic's nuclear programme.

While US president George W Bush has said that it is seeking a diplomatic solution, there is press speculation that the White House is considering military action against Iran, the world's second biggest oil producer.

At the same time, insurgents in Nigeria's delta area, a key oil producing and refining region, have refused a government peace bid. Their activities have shut down refining and cut supplies from the area by 500,000 barrels a-day. The Movement for the Emancipation of the Niger Delta is seeking nationalisation of the region's oil and the release of a number of imprisoned leaders.

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