The financial impact on Irish households of the war in Iran could top unseen levels, Emmajane Farrel writes, as cost of fuel rises exponentially.
The average cost of a litre of diesel at the pump has topped €2.28, while a litre of petrol has risen to €1.99 nearly one month into the US-Israeli conflict with Iran. Diesel reserves have been strained since Russia's invasion of Ukraine in 2022 and since western sanctions were implemented on Moscow exports.
The US-Israeli war on Iran furthers this strain by impacting shipping capabilities from the Strait of Hormuz as Iran is continuing to block shipments through the passageway unless attacks on their country cease. It is expected this will have a knock on effect for the Irish economy. Diesel underpins transport, freight, industrial activity, industrial supply chains, and agriculture all of which could see the interruption of entire industries. This could lead to inflation rising and a price increase on all goods as entire supply chains are affected. Depending how long the conflict lasts this could come at a grave cost to Irish households.
Concerns of price gauging are also mounting as the Competition and Consumer Protection Commission (CCPC) monitors fuel retailers to ensure no colluding takes place. With motorists already dealing with increased costs from office work returning, this surge in fuel prices puts Irish households under increasing pressure.
Since the onset of the war, Ireland's home heating oil costs jumped by 27% while the rest of the EU saw an average of a 3% increase according to MEP Lynn Boylan. This is due to our unusual use of kerosene in home heating oil. On top of that, 2026 is the first year that the Irish government have stopped giving out energy credits from the budget, something which could have alleviated household costs.
It has also been a pivotal year for data centre building by big tech in Ireland as the CSO states data centres account for 21% of Ireland's electricity use. This has had an ongoing, enormous strain on Ireland's energy grid. Given these grievances and the uncertainty around the Iran invasion, support for the government is at risk as 320,000 people in Ireland are reportedly already in arrears on electricity bills.
With 40-50% of Ireland's electricity produced by gas, the entire Irish household is affected in a domino-like effect. With no big reserves, and an existing burden of energy costs, Ireland sits at a uniquely vulnerable position. It remains to be seen how the Irish government will help households manage this exorbitant cost crisis or how long-lasting these price increases will be.