BY JOHN ELLIS, FINANCIAL ADVISOR
In the wake of relentless Israeli and US airstrikes on Iran, the assassination of its leadership, and retaliatory strikes across the Gulf states, the world grapples with a severe energy crisis. The closure of the Strait of Hormuz has halted 20 million barrels of daily oil, a fifth of global supply, in a near total shutdown, while Qatar’s suspension of LNG exports from Ras Laffan, since early March, aggravates the chaos.
With more than 150 freighters idling at sea, this blockade has triggered immediate supply shocks, increased freight costs and disrupted global logistics. As the conflict drags on, fears of a prolonged slump loom, with inflation rising as the economy slows.
As a nation we are a net importer of fossil fuels and therefore are exceptionally vulnerable. Oil constitutes more than 50% of the country’s energy consumption, powering 93% of transport. Homes rely heavily on imported gas, much of it now jeopardised.
European gas prices surged up to 50%+ in recent days, with EU storage at a critically low 30%, well below the five-year average. Germany’s reserves are at 20.5%, increasing volatility. Qatar, supplies a fifth of global LNG and 30% of Europe’s jet fuel via Hormuz routes — hence the rapid price increases in heating oil, petrol, and diesel that we are experiencing.
Faced with an outcry of “price gouging,” Minister for Enterprise Peter Burke asked the Competition and Consumer Protection Commission (CCPC) to investigate. Burke met suppliers on who pledged full co-operation.
Yet, this appears to be more political manoeuvring than real action. The Government appears to be deferring the present crises to the independent bodies to buy time, hoping the issues fade. Yet, it could have value but look at the CCPC’s response which shows up the limitations. There is no legal obligation for ‘fair’ pricing, only bans on collusion. Companies can independently hike prices, and, while the investigation may scrutinise wholesale-to-retail trends or evidence of cartel behaviour, profiteering is not illegal!
While there is no evidence of widespread gouging yet, the investigation may expose collusion if it exists, the real fix lies in policy, not just investigation.
At time of writing, the national average for 500 litres of home heating oil has surged more than 60% since the conflict escalated, rocketing from around €503 to €793 – €833+ in under a week (with some areas exceeding €830). Supplies are tight as some companies are not taking orders for the foreseeable future. Petrol and diesel have crossed over the €2 a litre barrier at many forecourts. Will reductions follow suit as quickly? History suggests not!
This crisis exposes deeper flaws in Ireland’s energy strategy. Household bills remain 40% above late-2021 levels, among Europe’s highest, fuelling arrears. A Government task force on affordability, established last year, has met only three times and issued one interim report. Promises of a comprehensive strategy and a study on wholesale price remain unfulfilled. There is real pressure now to reinstate universal energy credits.
Longer-term, Ireland’s reliance on volatile imports remains. Offshore wind, touted as a “clean and cheap” solution, will not contribute until 2032-2033, experts warn. Meanwhile, massive electricity network investments will increase bills, with non-wholesale charges rising. Gas, still dominant, ties prices to global whims, as seen this week.
Farming faces hidden risks as 30% of global fertilisers depend on Gulf petrochemicals, potentially disrupting harvests, and inflating food costs, overlooked in a tech-obsessed world.
Ultimately, as a nation we have little control or influence on geopolitics, but we must do what we can. We need to increase renewable energy, minimise upgrade costs, and focus on vulnerable households. As business confidence erodes and everyday costs bite, this conflict reminds us in a “heavy, dirty” economy, energy shocks hitting hardest where preparation lags.
And we the customers as always, pay the price.
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