WHILE the public mulls over the potential long-term fallout from the recent Lisbon treaty vote, the government may soon find itself grappling with another result of the referendum: a crippling economic crisis brought on by neglecting the worsening diesel price situation.

During the past three weeks, with politicians focusing on the treaty at the expense of all else, a growing wave of militancy has spread through the Irish haulage industry, which looks set to lead to unprecedented nationwide fuel protests within 10 days.

The Irish Road Haulage Association, which previously opposed the type of fuel protests seen across the rest of Europe, has reversed its position in recent days due to a groundswell of anger among ordinary truckers, who feel the government has ignored their plight.

"We need to make our point because we can't see what the government is going to do. We need to show them how dependent we are on truck transport and ports," said Michael McBride, general manager of Virginia Transport, a Cavan-based operator.

'Nothing political'

McBride, whose firm is a medium-sized operator with 65 trucks, said the firm's financial position had deteriorated sharply in the past six months due to spiralling diesel prices, leaving it with no alternative but to support the protests.

"It's all about finance, it's nothing political. We just would like to see some form of initiative or incentive from the government because we operate with customers who are on tight margins and if we push them too far to recover our costs, they'll go bust," he said.

McBride admitted that some customers were resisting cost increases but said this situation had improved in recent months.

"There are companies who have good relationships with hauliers and they understand it, particularly as they've seen their personal diesel costs rise."

Many hauliers, however, are struggling to recover their costs from their customers and some are backing the protests as a way of sending out a message to them.

"There needs to a quick, sharp shock to the customer base. We need to show them that they can't do without hauliers," said Sean Tansey, owner of Tansey Transport, a Naas-based haulage firm. "We need to see some serious increases within weeks. In very small terms, it costs €500 more to fuel a truck going on a round trip to Madrid since the start of the year."

Toughest times since 1980s

Tansey has been in the haulage business for over 25 years and he believes that the industry is facing its toughest times since the 1980s.

"It was tough back in the early 1980s when work was quiet but costs were much lower."

According to Jimmy Quinn, president of the IRHA, the hauliers' main demand is that the government cut the excise duty it levies on transport fuel, which currently stands at 36.81c on a litre.

"Transport fuel has to be looked at as an industrial raw material rather than as a luxury. The other problem is that, due to lack of enforcement, a haulage licence is now like a dog licence – practically meaningless," he said. "The number of people running around doing haulage on farm vehicles and running on cheap agricultural diesel is incredible and the government is doing nothing about it."

The IRHA has an unlikely ally in its bid to convince the government to reduce excise duty – the Irish Exporters Association (IEA), which has called on the government to act immediately.

"As an island, we are more exposed to road haulage than other countries. Even a large proportion of air freight goes via Heathrow and Amsterdam," said IEA chief executive John Whelan. "Any protest would bring the economy to an instant halt as we import two-thirds of the raw materials in our exports."

Despite claims from some hauliers, Whelan insisted exporters were doing everything they could to help the truckers but the government also needed to intervene.

"One of the immediate routes the minister can take is to allow hauliers to use agricultural diesel. While it's a cost to the exchequer, any blockade would have huge implications for exporters," said IEA chief executive John Whelan.

The Sunday Tribune has learned that one haulier is already using agricultural diesel legally – government-owned railway company Iarnród Eireann, which competes with private truckers for heavy loads.

It pays excise at just over 4c per litre, which represents a considerable saving for the company, given that a typical locomotive holds around 4,000 litres of diesel.

It also means that while other hauliers are considering downsizing due to rising fuel costs, it has started to expand its freight services after a decade of decline.

"Rising fuel costs would be to the benefit of rail freight," said a spokesman.

In recent months, the company has begun transporting cement between Irish Cement's factory at Platin, near Drogheda, to Tullamore and has expanded its container service between Ballina and Waterford Port.

"These are important traffics for us, and we always seek opportunities to expand such business. The volumes offering and the increased number of drivers in the system have allowed us to increase the traffic."

Wrong signal

It seems unlikely, however, that the government will extend the lower excise rate paid by Iarnród Eireann to other hauliers without a fight. Last week, taoiseach Brian Cowen told the Dáil that to do so "would send the wrong signal both to consumers and oil producers".

Political sources are also indicating privately that the government believes any attempt to reduce fuel prices will be ineffective as the price is set by global supply.

"The existing market price does not change as suppliers constrain production and hauliers take the subsidy/tax relief, which could be better used to support health, education or other important social programmes," said one source.

How convincingly the government can sell this argument to angry hauliers is likely to have a more profound impact on the short-term future of the Irish economy than any European treaty.