The latest decrease in home heating oil prices is good news for Northern Ireland – but other aspects of the cost of living crisis are not expected to improve quite as well, an economist has warned.
ew figures from the NI Consumer Council show that the average price for 900 liters of oil this week is £730.10.
This is a drop from £758.11, which is the price the same amount of oil was costing on March 3 — just seven days after the Russian invasion of Ukraine.
Northern Ireland’s oil prices shot up more than 35% in a week after the war broke out — with 900 liters rising by over £200 in that same period.
“This is good news. It means that the disruption to the world oil markets, that has been caused by the war in Ukraine, is having less effects,” economist John Simpson told the Belfast Telegraph.
He said while he wasn’t shocked that prices have dropped, he doesn’t think the likes of fuel prices will return to as low as they once were.
“I’m not surprised. I thought that the spike in oil prices would probably come down again once the world got a bit better adjusted to the way in which events have gone,” he added.
“But secondly, will the price of petrol come back to the price it was earlier this year? I don’t think so.
“It’ll come down a bit, but the days of the prices that we knew in January 2022 — we’re not going to get back there.”
Back in January, average petrol prices in NI were around 141.81p per liter.
As of yesterday, the Consumer Council reported average petrol prices in the region were 159.5p per liter — still substantially higher than earlier in the year, but lower than a week ago, when the average was 161.4p.
“There’s no reason why — in terms of international state — the oil prices shouldn’t come down quite a lot further. If they do come down further, it’ll do a lot of good to the marketplace at the moment,” Mr Simpson added. “It will ease the problems of inflation which have been sitting there causing such an amount of domestic pain.
“We were forecasting that as soon as the pandemic ended, there was a risk that there would be inflation across Western Europe, and it’s been made worse by the war in Ukraine.
“Now we’ve come to a situation, where we’re beginning to learn, sadly, how to live with the consequences of that war, and it does mean that we’re going to now have to get used to inflation this year. ”
The Office for National Statistics (ONS) has said Consumer Prices Index (CPI) inflation rose 7% in the year to March, up from 6.2% in February.
It is now the highest point since March 1992, when UK inflation rates stood at 7.1%.
Mr Simpson said that while this is currently the case, he suspects “it can probably go to between 8% and 9% as the months of this year go by”.
“The most optimistic view is that by the end of this year, the inflation rate will come back down here to around 4% to 5%. No government can do anything to avoid that.
“It’s a painful consequence of the way in which the world’s trade is organised.”
The Consumer Council’s Peter McClenaghan has said the organization has been conferring with the Northern Ireland Oil Federation on a weekly basis to “encourage them to make sure prices go down as soon as they can because obviously people need it right now”.
He previously commented: “The issue with oil is that it’s so much harder to predict, but this [price decrease] is a positive sign. It’s really early days and there’s still a real need for more support for people.”
Stormont department faces energy bill rise, see page 18