A month more of war could return us to COVID-era restrictions

 There is growing concern that the State may have to put COVID-style travel restrictions in place if the Gulf crisis continues for another month.

A senior Government source warned: ‘If there is a prolonged crisis, there will be restrictions on travel. It is a case of “brace yourselves for Covid II”.’

The source added: ‘No one dares say it, but the reality is the need for similar packages to coronavirus are being considered at the highest level.

‘We could have similar restrictions on travel or, at a minimum, a strong campaign urging people to only travel by car if it is absolutely necessary. Working from home is suddenly, in the eyes of the Government and employers, becoming very popular again.’

They also did not rule out COVID-style economic supports, noting: ‘There is also the reality that a lot of businesses are on the edge. Will they need support to stay afloat?

‘If they don’t get it, we will face a proper summer of discontent.’

One minister warned: ‘There won’t be universal supports, but after the €600million VAT package for hotels and hospitality it would certainly be less easy to oppose.’

The TD added: ‘We have to look at realities. Will there be rationing of petrol or blackouts?’

Another senior Coalition source confirmed: ‘It is all very sensitive, but there is contingency planning of that [Covid crisis] nature. That would be accurate.

‘There are people planning and the consequences of ongoing conflict in the Gulf is part of that planning. It is not a ’70s-style oil crisis yet. Currently it is a difficulty, but were the conflict to go on it will be a crisis.’

However, one minister claimed: ‘There is some optimism. There is, when it comes to acts of violence, a lot more posturing than shooting. The hope is: it is moderating. Iran is saying it is not negotiating, it is sending views, but that is negotiating.’

But they warned: ‘It is very difficult to predict where it is going. It is a knife fight between two madmen, but, to be fair, the Iranians have a strategy: the return of control of the Strait of Hormuz and the departure of America.

‘No one, even in America, knows what Trump’s strategy is.’

Social Democrats’ climate change spokesman Jennifer Whitmore also warned: ‘The concern has to be that the [oil] price increase is only the first wave, and the Government response is only a Band-Aid. We need a sustained plan to stop repeating these crises and to deal with the ongoing impact of the Ukrainian war on energy costs.

‘Anyone who gives out about claims about gouging should consider that, while wholesale prices for energy are 72% lower than the peak in 2022, little of that has been passed on to consumers.’

She added: ‘The concern is even more costs will be layered on top of what has come before. There is a real possibility customers will be hit with a double whammy.’

Economist Oliver Browne also warned: ‘The impact of the current crisis is being softened by existing reserves of oil. The world was somewhat over-supplied with oil by about 20%. We will, however, pay through the nose for it.

‘We may have to broaden our base from outside the North Sea, possibly even America.’

Mr Browne also warned that growing problems over the credibility of President Trump may stymie recovery.

He noted: ‘The markets are struggling to adjust. Traditionally, the main source of credibility is the American president. In the case of Mr Trump, though, the absence of credibility means his interventions do more harm than good.’

One economist warned of the Trump credibility gap that ‘everything he says weakens credibility – he is the most ethically-compromised American president since Nixon’.

UK to allow use of its bases for strikes aimed at opening the Strait of Hormuz

Concern is also growing over the ‘leakage’ of the crisis into other sectors of the economy, such as agriculture and building, which are both extremely sensitive to energy price rises.

One Government figure close to the heart of Cabinet said: ‘Agriculture is on the edge. We could only cut the rate for green diesel by 3c because it is only 5c. Farmers are looking for tax cuts on taxes they don’t even pay.

‘We could cut the carbon tax of 17c, but that would really open Pandora’s Box. By next month, farmers will have run out of fertiliser. There will be pandemonium.’

Energy makes up as much as 85% of the cost of fertiliser, as the production of nitrogen, its main ingredient, is energy-intensive.