The scale of “fuel tourism” across the Irish border

Mainly due to differing tax rates, the retail prices of motor fuels in the Republic of Ireland are generally lower than in Northern Ireland.  This leads to “fuel tourism”, whereby many Northern Ireland consumers buy fuel in the south. It would be useful to know how much fuel is sold to these cross-border consumers. Fuel sales make an important contribution to tax revenues, and a shift in relative tax rates across the border could lead to significant changes in tax receipts arising from cross-border sales. Also, European climate policy makes each country responsible for the greenhouse gas emissions from fuels sold to retail customers within its borders, regardless of where the fuel is ultimately used or whether the user resides abroad. The level of cross-border fuel sales thus has implications for the policies used to reduce greenhouse gas emissions from transport.

This research estimates the quantity of petrol and diesel fuel sold by forecourt retailers (i.e. petrol stations) in the Republic of Ireland to consumers in Northern Ireland during the 2013-2015 period. Statistical methods are applied to monthly data on fuels sales by individual retailers in the border counties. The key assumption is that petrol stations nearer to the border should enjoy higher cross-border sales than otherwise similar petrol stations that are further away. Analysing the geographical pattern of sales allows us to infer how much fuel is purchased by customers from Northern Ireland.