The government is expected to tell truck drivers today that it will ease the tax burden on diesel but not until December, as the hauliers warn they will join the Europe-wide protests against high fuel prices on Friday.
The Government is believed to be examining the idea of introducing a VAT rebate on diesel for hauliers in the December Budget, but there is no suggestion at this stage that it would be backdated.
The measure would be seen as an effective way to target relief at truck drivers rather than to give it to every diesel consumer. A cut in excise duty may not have been ruled out, but according to EU regulations it could only be reduced to 19.3 per cent from 25.6 per cent.
With petrol and diesel prices at the pumps set to rise again, the Irish Road Haulage Association (IRHA) last night demanded an immediate reduction in oil prices or a compensation package to be put in place until prices are reduced in the Budget.
With the Taoiseach again ruling out any pre-Budget cut, attention will now focus on whether a temporary compensation mechanism can be found.
Mr Ahern and the Minister for Finance, Mr McCreevy, will tonight meet the IRHA, whose president Mr Gerry McMahon warned last night that his members were likely to blockade ports and access routes to Dublin from Friday if no proposals were forthcoming.
However, while the Government may not satisfy all the IRHA demands, it is likely to produce some proposals tonight, thus reducing the prospect of protests. The Government is standing firm against demands for an immediate tax reduction. Asked last night if a pre-Budget cut was possible the Taoiseach said: "As far as oil goes, that is not possible."
The Minister for Public Enterprise, Ms O'Rourke, is expected to attend a meeting of EU transport ministers on September 21st to discuss fuel taxes.
The hauliers base their demand on the fact that the Government has seen a significant increase in its tax take as a result of the oil price rise, with VAT charged on diesel at 21 per cent and excise duty a further 25.6 per cent.
Britain and much of Western Europe was gripped by growing protests over high fuel costs last night as oil prices failed to fall significantly despite the oil producing countries' weekend decision to increase supply.
Oil prices have eased only marginally, from $33.62 a barrel to $32.65 a barrel, with the Taoiseach last night echoing analysts' predictions that the price would not fall substantially until the end of the year.
It cost as little as $22 a barrel last March, with the plummeting euro exacerbating the situation in the Republic.
The IRHA was further agitated last night by news that retail diesel is likely to rise by two pence a litre and petrol by four pence in the next few days. Most Irish oil distributors will increase prices of oil products within the next 24 hours.
Oil companies in Ireland have stressed that supplies are plentiful and fuel is still arriving in the State, unaffected by European protests.
However, by late yesterday evening queues had formed at some petrol stations.
Unofficial pickets and blockades in support of demands for a tax cut threatened to bring Britain to a standstill last night. More than half of Britain's petrol stations had run dry, while the health services warned they were on the verge of a life-threatening crisis.
Protests were also stepped up yesterday in Brussels, Germany, the Netherlands and France, although Britain saw by far the most serious disruption.
The British government assumed emergency powers at a meeting of the Privy Council chaired by Queen Elizabeth, and Mr Blair insisted that the oil companies must ensure the supply of fuel continues.