Government measures to help households cope with the surge in energy prices benefit those on higher incomes almost twice as much as those on lower incomes, according to a new report from the Economic and Social Research Institute (ESRI).The report analyses the effect of two packages of measures introduced by the Government in March and April on household incomes as energy prices soared in response to the closure of the Strait of Hormuz – a key shipping gateway for the world’s oil.The measures considered include the reduction in excise duties on fuel, the suspension of the National Oil Reserve Agency levy, the extension of fuel allowance, and the deferral of planned carbon tax increases.The report establishes the measures are “progressive in relative terms”, benefiting the lowest income households by 1.7 per cent of disposable income compared to 0.6 per cent for the highest income households.However, in absolute terms, it says higher-income households “benefit by almost twice as much as lower-income households”, indicating that much of the €440 million cost of the package is “directed at high-income households”.“This results from the untargeted nature of excise cuts: they lower prices for all consumers, with the largest benefits going to households that use more energy,” it says.“This poor targeting raises concerns about cost effectiveness, which are compounded by the fact that tax cuts erode the tax base, which is already vulnerable to volatile corporate tax receipts.”The report also notes that indirect tax cuts have proven “politically difficult” to undo in recent years, raising the prospect that the current cuts may be extended.The ESRI’s analysis suggests the measures will ease energy inflation pressures on households “somewhat in the short run”, but says the “largely untargeted nature” of the measures means lower-income households are “not well insulated from the shock”.[ Energy crisis: Simon Harris floats one-off payments for heat pumps and efficient carsOpens in new window ]More generally, the report finds the Government’s measures reduce the immediate energy cost increases by approximately half, but do not fully offset the “regressive nature” of energy inflation. “Crucially, much of the benefit of these measures comes from broad-based tax reductions, which apply to all households regardless of need,” it says.The report notes there have been “substantial price increases” at fuel forecourts around Ireland, with average diesel and petrol prices exceeding €2 and €1.80 per litre respectively. Home heating oil prices rose by over 63 per cent year-on-year in March.“For home-heating oil and motor fuels, the average share of income spent on each commodity is larger for low-income families than high-income families,” the report says.Energy inflation is described as “highly regressive”, with households with the lowest income expected to face energy cost increases of 3 per cent of disposable income, compared to 1 per cent in the highest income households.[ One in seven families now in arrears averaging €511 on electricity bills, says regulatorOpens in new window ]In cash terms, estimated energy cost increases range from €15 per week for the lowest income households to €28 per week for the highest income households.