Wednesday, April 16, 2008

Sticker Shocked

The Americans, of course, have a term for it: sticker shock - that moment when the price or bill for something you are buying is unexpectedly high. Mine came earlier today when I bought petrol (the orange light on the dashboard was warning me I might have to get out and walk soon ...)

The cost of filling up my petrol tank came to just over €71 - the first time ever. And this just as I was getting used to €60-something (and even €50-something didn't seem that long ago either), ouch! More and more of us are starting to experience sticker shock: whether at the petrol station or in the supermarket. According to AA Ireland, the average retail price of a litre of petrol is €1.207, while a litre of diesel stands at €1.246. A year ago, prices were €1.111 and 1.068 respectively. That's annual inflation of 8.6% and 16.7% - or more than three times the general consumer inflation trend in the case of diesel. Double ouch!

Still, we should be grateful for the weakening dollar. If petrol and diesel prices had risen in line with the dollar price of a barrel of oil over just the past year (from $62 to $115 approximately) then we would be paying €2.06 and €1.98 respectively. Triple ouch! It isn't just petrol for transport that's affected of course, about half of Irish homes have oil fired central heating. Anecdotally I have heard of consumers switching from ordering oil deliveries by quantity (100 litres/200 litres) to ordering by value (€100/€200): such is the sticker shock as prices keep rising.

Still, maybe global warming will mean that we will all turn down the thermostat on the central heating? But long before that I expect that sticker shock will do more to curb our energy use than any amount of worthy exhortations to do our bit for the environment. It already has.

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