Price shock: Why the cost of cooking oil is rising

Price shock: Why the cost of cooking oil is rising

Everyday groceries are rising in price at a rapid pace, with a new one estimate from Eurostat indicating that consumer prices rose here by 8.2% during the year to the end of May.

This leads to higher costs at the cash registers, which can potentially add hundreds of euros to the average household’s annual accounts.

But not all price increases are the same, and a myriad of factors affect different products in different ways.

To help you understand what is happening, we have taken a closer look at a selection of everyday foods.

Everyone has seen significant price increases, but everyone has a different story to tell about the causes.

In this paragraph, we take a look at the prices of cooking oil.

What happens to cooking oil prices?

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Adam Maguire discusses the rising cost of cooking oil RTÉ Radio 1’s Today with Claire Byrne

According to the CSO, the price of vegetable oil rose by 14.4% during the year to March – the price of other edible oils, excluding olive oil, is 8.4% higher.

So it is far above the general increase in the cost of goods.

An important reason for this is the war in Ukraine.

Ukraine is a major producer of sunflower and all its by-products – including sunflower oil.

It accounts for about half of the world’s sunflower oil exports, while Russia accounts for another quarter. So between the two countries, you have three quarters of exports tied up.

Once the war broke out, it obviously had a major impact on growers in Ukraine – but it went further than that.

Sunflower oil that was ready to be exported was also kept up due to blockages in ports and the danger of trying to move that land. At the same time, work on processors and refineries was also stopped by Russia’s attack.

So overnight, you basically got the majority of the world’s livelihood shut down.

It obviously affected the actual price of sunflower oil – but it also had a big impact on everything else.

This is because sunflower oil is a cheap, neutral oil – so it is normally used a lot in all kinds of cooking. Restaurants, cafes, wood chippers … all of these would be highly dependent on it.

But when it suddenly became more difficult to get, they were forced to scramble to find alternatives. And that led to the prices of all other types of oil jumping as well.

Rapeseed oil has been a popular alternative, for example. If you look at the commodity markets, you can see that the price is about 55% higher now than it was a year ago – and that’s after it eased back recently.

Rapeseed oil is the main ingredient in the vegetable oil you find in Irish stores – while it is also a great ingredient in margarine.

So the price of that type of product has also been pushed up.

So is all this due to the war?

Not quite – like most things, there are several other elements that come into play.

Canada is a major exporter of rapeseed oil, but a heat wave and drought in the country affected the harvest there.

Other factors include things like a ban on the export of palm oil in Indonesia – it is another ingredient in margarine, but also other everyday products such as soap, makeup and even some chocolate.

And rising energy prices are also having an effect – because it means that it costs more to refine and transport oil.

Rising prices for fossil fuels have also created another small domino effect, as it has boosted demand for biofuels.

They are often made from recycled oil, so waste oil that has already been used in cooking, which is then turned into fuel – but some fresh or “virgin” oil is also used for this purpose, which removes it from consumer use.

Will the oil price fall back soon?

No – if anything, it will be the other way around.

This is because many large cooking oil companies do what is called securing their supply – this is where they agree on a price for delivery months, or maybe even a year or more in advance.

It’s a way to lock in a price in advance so you can plan ahead – but that means the price of a lot of oil today is based on what it cost in November maybe or even May last year.

Companies are now securing for delivery at the beginning of next year – so it is not until that point that we will really start to see the effects translate into what we pay and what restaurants and others pay.

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