Ireland faces the threat of fuel forecourts running dry of diesel in just two weeks, leading economist David McWilliams warned yesterday.
It comes just a day after the Central Bank warned that Ireland could be facing energy shortages later in the year.
In the worst energy crisis in almost half a century, oil refineries are running out of crude oil so the whole of Western Europe could run dry of fuel in just weeks.
The emergency could lead to food prices spiralling as farming relies heavily on diesel to power its machinery to harvest crops.
The situation is so dire, the economy is running on an "hour-to-hour" basis, he warned.
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Mr McWilliams said: "Not only is oil going up, diesel is going up and there's a real threat diesel will run out in Western Europe over the course of the next two or three weeks, or maybe before that.
"We import a significant amount of our diesel, it comes from two refineries in the UK where it's first processed. Those refineries do not have any crude at the moment. So we are basically running the economy on a day-to-day, hour-to-hour basis."
He added: "We have not just an oil crisis, we have an energy crisis the likes of which we haven't seen in 50 years.
"Normally we have much more reserves but we don't and the reason is we outsourced, not just [Ireland] but most of Europe, sourced our energy problem to Russia by giving Russia the keys to our economy.
"Then of course when diesel goes up, anybody in the farming community will tell you, diesel is the single biggest input into farming.
"So the diesel price goes up, food prices go up and when food prices go up everybody's standard of living falls."
Planned further sanctions against Russia will make the economic situation worse as they will send prices up even further, he claimed.
The prospect of fuel rationing was raised by the Central Bank as it presented its latest economic forecast which saw growth prospects being cut but predicted falling unemployment.
Central Bank director of economics and statistics Mark Cassidy said: "We don't have estimates, we're not forecasting that there will be energy rationing - it cannot be ruled out.
"We have an integrated European energy market now, so I think if there were to be acute shortages of gas later in the year, we're probably talking the winter when the demand would be greatest across Europe, then I think all European countries would share in that.
"So I'm not ruling out the possibility there could be some need for rationing but we haven't factored that into our forecasts and our scenario analyses are more on the pricing side than the rationing side," he added.
Domestic gas prices rose by almost 30% in the past year, electricity is up more than 22%, while petrol was up more than 30% a litre breaking the psychologically significant €2 mark before the Government reduced the duty recently to bring the price back down. The price of diesel was up 32.5%.
The Central Bank is forecasting inflation will top 8% soon, caused by spiralling energy costs.
However, Minister For Public Expenditure, Michael McGrath, yesterday firmly ruled out the prospect of fuel rationing.
He said: "The Government is alert to the risks here. There is a senior officials group that is meeting regularly and engaging with all the key bodies in the State and the regulator, EirGrid, providers.
"We believe we will get through this period. Certainly, the Government has not been alerted to any significant concern about shortages or rationing or any suggestion of any of that.
"The reserves in respect of NORA (National Oil Reserves Agency) and the oil reserves have been managed as well."
Mr McGrath said that while Ireland will have to invest in renewable energy, oil and gas-fired power stations that were approaching the end of their lives have been "brought back into play".
