There are two things that can turn the tide on rising fuel costs – the weather and a weaker dollar.
A mild winter will reduce demand for fuel for heating. The good news is there are some signs that we might be in for one. The European Centre for Medium-Range Weather Forecasts, an intergovernmental organisation supported by 35 states, sees this winter as being milder than normal, with every month slightly warmer than the mean model climate.
Should that forecast prove accurate, it would mean demand for heating fuels would be reduced. If it is wrong and winter is colder than average, prices will rise.
The strength of currencies against the dollar will also be a key issue over the coming months. In 2022, the US currency has gained more than 13% against the euro and has hit the highest level against sterling in 37 years.
This matters because global commodities are priced in dollars. Since the start of June, Brent crude has dropped 21% in dollar terms. But if you live in the euro area, the price has only dropped by 15%, and in the UK, 13.5%.
This week will be a test of what happens next in currency markets, with both the US Federal Reserve and the Bank of England expected to raise interest rates. Should the market take the view that the Federal Reserve will continue to hike rates for some time, it seems certain that a strong dollar will continue to be the theme for the year. And with that, little relief for consumers buying fuel products either in the Ireland or the UK.