GB Oils’ profit used to be much bigger, Orkney fuel boss claims
By JOHN ROBERTSON
One of the Orcadian fuel station owners who broke GB Oils’ monopoly on the islands’ supply believes the Irish-owned company has since slashed the amount of profit it takes from Shetland and Orkney.
David Tullock of WR Tullock in Kirkwall said the fuel war and political pressure had led GB Oils to drop its prices so much that petrol can now be cheaper in Lerwick than the Orkney breakaway group is able to charge in Kirkwall.
Tullock’s is one of the so-called gang of four Orkney garages which started buying petrol and diesel wholesale from Caithness during the crippling price hikes of last year instead of continuing to use GB Oils’ Scottish Fuels depot in Kirkwall. While GB Oils sends a sea tanker to Orkney and Shetland the rival supply comes in by road tanker from Simpson Oils of Wick, who have a depot at Scrabster Harbour. A fifth Orkney garage has since joined the breakaway.
“That reduced the prices in Orkney dramatically,” Mr Tullock said. “Orkney’s prices were way down below Shetland’s prices for three or four months because we were taking in from Simpson’s.”
According to him, when the rebels started in late October they sold unleaded at 109.9p while those selling GB Oils’ unleaded were charging 119.9p – 10p more. In Shetland the price was also generally 10p a litre higher at the GB Oil-owned Leask’s filling station. But by late January, with fuel prices falling nationally, GB Oils had hacked up to 21p off the unleaded price (down as low as 98.9p at Leask’s in Lerwick) while the Orkney rebels had only managed to shave 10p off, down to 99.9p. “They’ve quietly got rid of their massive profit,” he said.
Mr Tullock was reacting to a story in The Shetland Times earlier this month in which GB Oils managing director Sam Chambers said the company’s margin on its range of products in the Scottish isles during January was just 4p a litre, which he said was less than it makes from sales in the UK mainland. He was countering allegations of profiteering resulting from the gap which leaves Shetland motorists paying at least 10p a litre more than down south.
But Mr Tullock believes GB Oils had been making a bigger profit than that until competition in Orkney and pressure for action from Orkney and Shetland MP Alistair Carmichael and local groups, including the Shetland transport authority ZetTrans. He said: “They only took in the massive price reduction after Alistair Carmichael started making noises about investigating into it. They just quietly did it.”
In May last year when fuel prices were rocketing a survey by this newspaper showed Lerwick pumps were not just 10p a litre more expensive than the Scottish average but 14.5p-16.5p a litre higher. A survey by ZetTrans found a huge gap of 23p a litre for unleaded between Lerwick and Aberdeen on 17th October.
The Orkney breakaway started after Mr Tullock discovered that Scottish Fuels was charging 8p a litre less to the garages it supplied in Caithness than to those it supplied, like his, in Orkney. Diesel is less of a fire and explosion hazard and Simpson’s can take it to Orkney (or Shetland) on a covered ro-ro ferry but petrol has to go by open-decked ferry, such as the Pentland Ferries’ ships or Northlink’s Clare.
Asked for a response this week Mr Chambers said: “I fear Mr Tullock is confused between what is margin and what are selling prices. Our prices could well have come down 10p since the festive season as local management set prices according to their stock situation which changes with each sea-fed cargo. For your information the gross margin we achieved for all products across the Scottish Islands in December was 4.3 pence per litre – not fundamentally different from what we achieved in January. This gross margin was less than we earned on the Scottish mainland.
“I can only repeat what I have said before in that we can only conduct business within Britain if we retain the confidence of our customers and the goodwill of all our staff. Fuel prices are always an emotive subject and in some ways this is a no-win situation for us.
“However I am not complaining as GB Oils has expanded its business since we moved to Britain in 2001 and we are now the largest independent distributor of distillate fuels in Scotland, England and Wales.”
GB Oils and Scottish Fuels are part of the giant Irish DCC Group which employs 7,300 people around the world. It is involved in healthcare, food and drinks, recycling and waste management, healthcare and electronic and computer products.