Petroleum Infrastructure of Ireland

Petroleum infrastructure

Irish Petroleum Industry Association

Irish Petroleum Industry Association

Representative body of those companies in Ireland engaged in the importation, distribution and marketing of petroleum products.

95% of the oil industry in the Republic of Ireland.

Recognised by Government as the representative body for the industry.

Promotes the understanding of the industry’s contribution to economic, technological and social progress.

Public policy - IPIAClimate change, IPIA supports rational policy. We cannotother EU policy: be expected to outperform EU

Illegal trading: Working closely with Revenue and others

Regulations: Enforce across the board

Security of supply: Work with National Oil Reserves AgencyPractical measures to GovernmentRemove the Irish oil excise anomaly

Economic growth: Main energy source, efficient infrastructure

What Ireland relies on

Sustainable Energy Authority of Ireland: Final Energy Demand

Petroleum remains important to Ireland

2010 petroleum 61% 2020 petroleum 58%

Petroleum industry in Ireland

Multi National Irish Multi National Irish

Now mainly independent and Irish

1990 2013

Loss of multinationals

Ireland security of supply has diminished

Independent oil companies less resilient to oil shocks- can become financially stretched- security of supply is less strong

Resulting threat to economic stability

Ireland

On western EU seaboard - ill placed in supply chain

Less…… reliant on upstream parent multinationals

More…… dependent on Irish banking facilities

Problem compounded by

Malfunctioning banking system. Banks don’t meet required credit rating status for suppliers

Sovereign debt crisis. More difficult to obtain credit to fund import of oil products

Cost of oil products. Considerable increase

… and on top of that…

Alcohol:

Tobacco:

Oil:

The Irish excise anomaly

Payment at the end of the month following delivery

Payment ninety days after the product is delivered out of bond

Payment as it leaves bonded terminal.

Companies pay excise tax before it can receive payment for product.

No duty deferral.

Nobody defends the anomaly…

The Commission on Taxation Report of 2009:

“The absence of a deferral period imposes an unfair burden on the industry and is contrary to the mechanism in some other EU Member States and to the collection mechanism for excises on other receipts such as alcohol and tobacco” (section 5.3.4, page 135).

IBEC has drawn this to the attention of Government in every one of its Budget submissions since 2007.

Government Departments say it is just there ‘for historical reasons’…

Priorities

Energy: About 60% is from oil Independent Irish companies

Credit crisis Tax paid before customer sees it

Alcohol: Excise duty deferred

Tobacco: Excise duty deferred

Consequences

The Irish excise anomaly encourages

industry to have as little product as possible at the end

of the distribution line; bulk storers and retailers to

minimise stock levels outside bond; companies to

minimise what they have taken out of bond and

distributed;

small quantity truck deliveries - therefore more truck

deliveries, increased traffic congestion, more emissions;

higher prices to consumers;

effect on Ireland’s security of supply.

Excise collection

Only Ireland has an excise collection system which

favours credit conditions for alcohol & tobacco over oil.

has this anomaly

no one defends.

and has Governments which choose to leave it this way.

Pump price – more than half is tax

Petrol at €1.59 Diesel at €1.53

Tax is 58% Tax is 53%

Prices from most recent AA survey – December 2012

29.73

4.59

54.18

1.80

0.16

2.00

66.54 VAT

Carbon

Excise

Biofuel

Energy

NORA

Untaxed

28.61

5.33

42.57

1.800.162.00

72.37

High tax regime for oil

Economic policy

Peripheral country, dependent on exports

Strain on economic activity & growth prospects

Transport industry (haulage ) very fragile

Power of hypermarkets & multiples to resist rising fuel prices.

Illegal washing of diesel

• €155 m per year lost to Exchequer in fuel duty alone

• High cost of repairing environment from waste washings

• Damages vehicles of unsuspecting consumers

• Difficult for legitimate oil industry to compete

IPIA is working with the Department of Finance, the Revenue Commissioners, the Garda Siochana and others to tackle this major problem.

Petroleum infrastructure of Ireland