Ireland Cash Rich, Leadership Poor
The storm is here
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In April, there is nothing. The loss of oil in April will be twice the loss of oil in March. On top of that, you have LNG and others. It will come through to inflation, I think it will cut economic growth in many countries, especially emerging economies. In many countries, the rationing of energy may be coming soon. We are heading towards a major, major disruption, and the biggest in history.”-Fatih Birol- Head of the International Energy Agency.
This article has a look at the Irish fuel protests, government advice and response. Ireland is failing on a fiscal and political management perspective.
Fuel facility blockades
The Irish fuel protest crisis began on April 7th. Truckers, farmers, construction workers and various professionals formed blockades on the M50 motorway, O'Connell Street and fuel facilities around the country for five days, including our only refinery at Whitegate in Cork, shutting down national diesel and petrol distribution. The protests have broad public support. Taoiseach Micheál Martin called it "an act of national sabotage" and deployed the Defence Forces to clear the blockades in the last 24hrs at time of writing. What he failed to acknowledge is that government levies make up 50-55% of the price problem. The resolution, such as it is, was a temporary Fuel Support Scheme for hauliers and farmers. Something, but nowhere near enough. The government's approach has been staccato, short and detached, with no understood situational context. It is reactive, not preemptive, ill-advised and not fit for the occasion. We need a fiscal response strategy that can last 3 to 12 months, not a €230million seven week band-aid. At time of writing, the protests are gathering nationwide momentum. The government have completely failed to get their arms around this situation.
THE LEVY TRAP
The Irish government takes 50-55% of every litre in taxes/levies. The structure is punitive, opaque, and designed so the government automatically profits when global prices rise. Ireland ranks #2 in the EU on diesel excise. And it’s about to get worse as the last ships to have left hormuz are arriving in Rotterdam and across Europe.
The MOT (Mineral Oil Taxes) in Ireland really are the best grift around. There are 5 layers of government take on every litre: Excise, Carbon Tax, NORA levy, VAT. Its the 5th that really takes the biscuit. You have 4 category-specific levies, then you wrap them all up and put VAT on top. Tax on tax.
Added to MOT, there are two more looming rate rises coming over the next 4 years. Carbon tax and the 2030 VAT bomb.
Carbon-Currently taxed at €71/tonne, moving to €100/tonne by 2030 adding another 8c/litre
The 2030 VAT bomb: EU directive requires Ireland to move home heating oil VAT from 13.5% to the standard 23% rate by January 2030. Nobody is talking about this.45% of Irish homes heat with oil, the highest rate in Western Europe. Nearly half the country is dependent on a fuel with no short term alternative, and the government has committed to increasing VAT on it by 70% within four years. These are not homes that can switch to a heat pump next winter. These are the homes that will be hit hardest by every price spike between now and 2030, and the government's own trajectory makes it worse, not better.
A beautiful extortion overall really. The takeaway point here is that the government have a lot of room to move, unlike in 1979 where they didn’t have a penny to spend.
The Numbers
The exchequer could absorb a full 12-month levy suspension and still run a surplus. The sovereign wealth funds were literally designed for moments like this. The ICNF (Infrastructure, Climate and Nature Fund) is one of Ireland’s three sovereign wealth funds. Currently with a balance of €4bn, it is a countercyclical fiscal buffer specifically designed to support State expenditure during economic shocks.
It is designed with limitations. Ireland can draw up to 22.5% per year (€900m) from 2026 onwards. This is actually the fund that was built for a moment like the current crisis, and the government has now used 25.56% of its annual permitted draw. So now we can see why the actual current response has been so small. They will need more firepower should this situation get worse. My personal feelings are that the annual draw cap should be increased at least 30% to €1.2Bln.
Oil prices & supply chain
With government policy set to expire May 31st, they are indicating they do not have a plan beyond that. One of the great things about trading commodities, is that you can get a price for your commodity up to 10 years out, for delivery at every month in each of those years. For example, If you wanted today to secure 1000 barrels of oil in September 2032, you can buy now for $68.32- done deal. So what price is oil trading at for May 31st 2026? About $96-$97. We trade oil 30 days in advance, so the price you trade today is for oil that is deliverable the first week of the following month- May.
There are two points to cover here.
First - Prices. The futures market currently prices this escalation softening meaningfully by April 2027. The more aggressive prices, above $90, are priced out after August 2026. I don’t think the market has this right.
US-Iran talks collapsed last night and the two sides are nowhere close. This is round one, but having covered this war and the tensions behind it for 18 months, I do not see near term resolution. The pattern of US negotiations has been consistent: come to the table, make concessions, then bomb. The US is struggling to recover the position it held in the Straits before the conflict, chasing nuclear oversight it gave up when it walked away from the JCPOA. Most commentators fail to cut through the noise to the one catalyst that drives everything here: Israeli strategic objectives, which the US will go to war to support.
Iran is in the driving seat. And the government’s emergency package expires May 31st, when Brent May 2026 is trading at $96.60 and no signs of resolution.
Second- The dead stop.
The last tankers that left the Straits before closure are arriving in Europe now. As Fatih Birol of the IEA warned, if March was bad, ‘‘April will be much worse’’. Countries are already drawing on national reserves.
Ireland imports 100% of its oil. No domestic production. Most refined product, diesel, petrol, kerosene, comes from UK refineries in Wales and England, shipped to Dublin, Cork and Foynes. Whitegate in Cork, owned by Irving Oil, is the country’s only refinery and covers roughly a third of national demand at 75,000 bpd. The UK now has a 20% supply deficit and is competing for Atlantic basin crude from the US, Norway and West Africa. If UK refining output drops or domestic demand takes priority, Ireland has no fallback. No distribution pipelines. No LNG terminal. No alternative supply route. 90 days of NORA strategic reserves and after that, nothing. So we can survive until July. A lot of people don’t realise that during the Ukrainian situation, Ireland was down to 2 days worth of Gas storage supplies.
Will Ireland run dry? Probably not. There is spare capacity in the Atlantic basin and Ireland will get its share. But every barrel will be competed for, every cargo will be priced at a premium, and Iran knows that Europe is days away from the point where that competition gets desperate. That is their biggest playing card. They have had to play this card, not willingly. They are acting to protect themselves from an unprovoked war started by Israel.
Deaf leadership
It is not realistic to expect Micheál Martin (Taoiseach/Prime Minister) and Simon Harris (Tánaiste/Deputy Prime Minister, minister for Finance) to be capable of assessing this situation on their own. We want our politicians well-equipped with good advisors, domain experts and strategy players, and they are. What we do expect from leadership is assimilation of the information and then to create a fiscally and politically robust set of actions. This crisis was foreseeable, preventable, and is being mismanaged not because the Irish government have a lack of insight, but from my investigation, they have no willingness to have a robust fiscal response to this crisis.
Who is advising this government?
SEAI Sustainable Energy Authority Of Ireland
ESRI Economic & Social Research Institute
The Oireachtas Joint Committee on Climate, Environment and Energy.
The Irish central bank has not been asleep at the wheel. From the published guidance and data, Both Vasileios Madouros, Deputy Governor and Mark Cassidy, Director of Financial Stability have a grasp of the situation, however they are not being listened to. The SEAI and ESRI have done admirable work analysing energy shocks from multiple angles. The SEAI “Energy Security in Ireland” 2020 Report, prepared by Byrne Ó Cléirigh has gone deep on risk analysis. There is little they have not covered. Where it stops is at fiscal response measures, which is not part of its remit..
‘‘Higher energy costs, already reflected to varying degrees across the price of different fuel types, are likely to have both direct and indirect effects on inflation facing both businesses and households. Recent events, coming as they do only four years after Russia’s invasion of Ukraine and the accompanying historic, sharp rise in gas, oil and food prices, naturally lend themselves to comparisons with that period.
As of mid-March the scale of the initial energy price shock has not been as acute, with spot and futures gas and oil prices not persistently reaching the heights of 2022. But it is still material and, with Ireland being an energy importer, represents an adverse term of trade shock with related consequences for national income’’- Irish Central Bank Q1 bulletin 2026
The ESRI revised its inflation forecast from 2.1% to 3.2% for 2026 and 2.7% for 2027, noting that higher prices are likely to persist even if the conflict ends soon. Their researcher Conor O’Toole has since said the effects appear “longer lasting than we anticipated” and that the institute was “probably on the low side” in its inflation forecast because infrastructure damage in the region has proved more enduring than markets expected. He is right to hedge. Oil is up 45%, gas up 56%. The ESRI’s own rule of thumb is that a 30% increase in oil and gas prices adds 1% to Irish inflation. We are well past that threshold and the forward curve says prices stay elevated through the summer. 3.2% will not hold.
The ESRI’s consistent message is that cutting indirect taxes on energy is a poor way to protect those most affected by rising prices. They found that about 50% of the gains from such cuts go to the top 40% of households, with the lowest 40% getting less than a third. ESRI Director Alan Barrett called the government’s excise cuts what they are: an untargeted “subsidy to higher income households.” What the ESRI recommends instead is increasing welfare payments and fuel allowance, a double welfare payment, or increases in the working family payment, which they describe as a more effective anti-poverty measure.
ESRI researcher Muireann Lynch also recommended allowing staff to work from home where possible and reducing motor speeds on roads to reduce fuel consumption. This is what passes for energy shock planning in Ireland. Work from home and drive slower.
The ESRI is telling the government two things. One, this shock is worse and longer lasting than you think. Two, the policy you chose is the wrong tool because it funnels money to wealthier households. Both points are valid. But here is what neither the ESRI nor any other advisor is providing: a comprehensive fiscal response framework for a sustained price shock. This is a glaring failure of an inexperienced Minister for Finance.
Once the dust has settled, structural questions MUST BE ANSWERED. Why was there not a set-play fiscal response for a price shock of this magnitude in the first place? The SEAI mapped every vulnerability in 2020. The Oil Emergency Contingency Act was passed in 2023. Neither document contains a single line on fiscal response to sustained high prices. Irish consumers, in every plan that exists, are fully exposed to the price shock.
Spain
Spain's government understood the advice from their own institutions and acted in three weeks with 80 measures. Ireland's government received similar signals and produced a €235m sticking plaster with a seven week expiry.
Spain at 100% debt-to-GDP and running a 3.2% deficit mobilised €5bn. Ireland at 43% debt-to-GDP, running a €3.8bn surplus with €30bn in sovereign funds, found €235m with a two-month expiry. Population-adjusted, Spain spent roughly 2x per capita from a far worse fiscal position.
Spain’s specific measures:
VAT on fuel cut from 21% to 10% (Ireland left VAT at 23%)
20c/litre direct subsidy for hauliers, farmers and fisheries
Energy supply cuts banned for vulnerable households
80% subsidy on industrial energy tolls
Anti-gouging enforcement powers against companies profiting from the crisis
Open-ended commitment: Sanchez said measures “will remain in effect for as long as necessary”
Result: approximately 30c/litre reduction at the pump
In conclusion
This is an energy shock unlike any other, the worst Ireland has faced since 1979. The 70s were pretty wild in the oil game, with three separate shocks all stemming from the 1967 Six Day Arab-Israeli war, spilling into the 1973 Yom Kippur war and the Arab Oil Embargo. In a recent article, “Hold my beer 1973!”, I compared the 1973 shock with what we face today. The numbers show this current shock is 330% larger.
I used to be proud of how Ireland would get out in front of situations. Now we have a different breed of bureaucrat, scared men and women, party men and women afraid to get out in front of anything. Horses bolting everywhere and all that.
My experience of the energy industry swings deep, both personal and professional. Having been brought up in a family intensely affected by the aftermath of the 70s oil crises, to having lost almost everything personally in the post shale bust, to trading oil futures professionally. I see the protests and I know what is happening and what there is to fear. The shock may not last long but will have far-reaching tail effects. Regardless, it must be managed today, tomorrow and with contingency.
This was foreseeable. Every signal was there. The SEAI mapped every structural vulnerability in 2020. The Oil Emergency Contingency Act was passed in 2023. The Central Bank flagged the inflation transmission in its Q1 bulletin. The ESRI warned its own forecasts were too low. All government agencies, advisors and data were showing the adverse scenario. Yet the government had no sufficient fiscal response planned.
The Minister for Finance is the principal guardian of the national Exchequer under the Ministers and Secretaries Act. That is Simon Harris. The person constitutionally charged with guarding the nation’s finances produced a €235m response to the worst energy shock in 47 years, while sitting on €30bn in sovereign funds, a €3.8bn surplus and an annual tax take of €105.7bn. The ICNF was purpose built for economic shocks. It exists, it is funded, it is drawable. And it is barely being used.
Ireland needs a fiscal response strategy that can last 3 to 12 months, not a seven week band-aid. The money exists. The funds were built for this. The question is whether anyone in government has the nerve to use them.
The governments only concern was that the protests might upset Ireland's EU presidency so they set the army on them. By the time this shock begins to abate there will be food shortages and blood on the streets. Let's see how that upsets their EU presidency.