Petroleum Infrastructure of Ireland

Petroleum infrastructure 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 - IPIA Climate change, IPIA supports rational policy. We cannot other 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 Agency Practical measures to Government Remove 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 Now mainly independent and Irish

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 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

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