The fall in crude prices has been enough to counter a government-mandated change in rules around the refining of motor fuel at the start of this month that added 5c to the cost of a litre of fuel at the forecourts.
Petrol prices fell by 4c this month with a litre of the fuel now selling for €1.70 on average around the country, according to the latest AA Ireland fuel survey for January. Diesel is down by the same amount to €1.69 a litre on average.
The cost of charging an electric vehicle at home has remained unchanged.
An AA Ireland spokesperson said: “After several months of relative stability, January has brought a modest reduction in fuel prices for motorists.
“While the decreases are not dramatic, any easing at the pumps is welcome, particularly at a time of year when many households are managing post-Christmas financial pressures. Fuel prices do, however, remain high by historical standards.”
The survey shows that fuel prices softened slightly at the start of the year, reflecting more subdued movements in global oil markets and exchange rates.
AA Ireland warned that pump prices can still vary considerably by location, and motorists are encouraged to shop around where possible and take care of their vehicles.
Falls in the cost of crude oil were enough to outweigh extra costs of petrol and diesel due to changes to environmental rules on how the fuels are refined.
Prices at the pumps were unchanged last month and the two months before that despite a rise in carbon tax in October’s budget. Government-mandated changes will see 5c added to the cost of a litre of fuel from this month.
This is due to changes to the Renewable Transport Fuel Obligation (RTFO), which puts an onus on suppliers of oil to ensure that a set proportion of the motor fuel they sell is renewable.
Changes to the target this month will add 4c to the cost per litre.
Also going up this month is the Better Energy Levy on petrol and diesel. This is a cost associated with meeting the country’s energy efficiency targets.
After Vat, the Better Energy Levy will add around 1c per litre to both fuels from the start of the year.
There are five different taxes and levies on petrol and diesel.
AA Ireland has calculated that 65pc of the cost of a litre of diesel and 60pc of the price of a litre of petrol at the pumps is made up of levies and taxes.
Kevin McPartlan of Fuels for Ireland, which represents oil importers, petrol stations and oil distributors, said: “Wholesale prices for petrol and diesel have dropped quite dramatically in the last couple of weeks, largely due to softer global demand expectations, stable and improving supply and lower refinery margins.
“These factors, along with a slightly strengthened euro against the dollar have hidden the negative impact of government policies which have added 5c to the cost of every litre of transport fuel since January 1.”