Oil-consuming countries such as the Republic could keep petrol price rises down by reducing the Exchequer tax take on the commodity, the Saudi Arabian ambassador to Ireland and the UK has said. Paul Cullen reports.
In Dublin yesterday, Prince Turki al-Faisal said that up to 57 per cent of the price of oil in Ireland went on taxes, and the proportion in other countries was even higher.
Governments that had imposed such "exorbitant" taxes should review their position in response to the recent surge in the price of oil, he said.
Saudi Arabia was doing "what it can" to bring down the price by increasing its production, but it wasn't possible to say how soon this move would take effect.
Prince Turki said this was because many factors were beyond the control of his country and other petroleum exporters in OPEC. These factors included speculation on spot markets, instability in Iraq and a lack of new refining capacity in the US.
Asked whether the unilateral Saudi action could herald a break-up of the OPEC cartel, Prince Turki said he did not think so. OPEC was already producing more than the capacity previously envisaged.
Saudi Arabia wanted its partners to recognise the reality that higher oil prices could lead to a slowdown in the world economy and a consequent reduction in the demand for oil.
His call for a cut in Government taxes to bring down fuel prices will be echoed by a protest organised by the Irish Road Hauliers' Association (IRHA), which is to protest outside the Dáil today.
Prices have reached "crippling" levels, the IRHA argues. It says the Government is "profiteering" by collecting large amounts of tax and argues that the market in which oil companies operate is not competitive.
On the markets late yesterday oil fell sharply, although traders still maintain that Saudi Arabia's promised output boost would be insufficient to meet spiralling global demand or replenish thin US gasoline supplies.
After Monday's $1.79 (€1.48) surge to a new closing high on US crude oil, some traders took profits and prices slipped 77 cents to $40.95 a barrel in US, trading about $1 away from a record 21-year high reached last week. This gave a strong boost to Wall Street where shares moved strongly ahead. The Dow Jones Industrial Average closed up 159.19 at 10,117.62.
European benchmark Brent traded 86 cents lower at $37.31 a barrel, having surged more than $1.60 on Monday.
Oil is still higher than Friday's weak close after Saudi Arabia said it was boosting its own production by 10 per cent to 9.1 million barrels per day (bpd), without waiting for an OPEC decision to lift official limits.
Saudi oil minister Mr Ali al-Naimi said the kingdom could lift output to 10.5 million bpd if demand warranted.
But the unilateral move appeared to upset some members of the cartel, who are not willing to endorse Saudi's plan to legitimise current cartel leakage by lifting the official ceiling by 2-2.5 million bpd. This has left the market uncertain and nervous. - (Additional reporting Reuters)
