Motorists in the isles look set to benefit from a five pence per litre reduction in the price of petrol and diesel at the pumps.
The Tory-Lib Dem coalition government is asking the EU for permission to cut fuel duty in remote isles as part of a new pilot scheme. Shetland will be included, along with Orkney, the Western Isles, the Inner Hebrides and the Scilly Isles, and it may be rolled out to other areas at a later date.
Islanders have been accustomed to spending 10-15 pence per litre more on fuel than in many areas on the UK mainland, and the gap between garages in Lerwick and the cheapest stations in the Scottish capital Edinburgh is currently as wide as 20 pence per litre for both petrol and diesel.
Northern Isles MP Alistair Carmichael, who unsuccessfully lobbied the previous Labour government to introduce such a scheme, said he was delighted after chief secretary to the treasury Danny Alexander announced the move at the Liberal Democrats’ Scottish conference at the weekend.
Mr Carmichael hopes the move will increase pressure on wholesalers and distributors to help bring prices down to a fairer level.
“This is an issue that I have campaigned on since I was first elected to parliament and for some years before that,” he said. “I am delighted that the coalition government has been able to take action on it in less than six months since coming to power.
“This is not the end of the story yet as the EU still has to give its formal approval for the measure but given that this is already done in other EU countries I have always believed that should be achievable.”
Fuel supplier GB Oils has a monopoly on bringing petrol and diesel to Shetland. Countering allegations from councillors that it was profiteering at the expense of islanders and effectively operating a “cartel”, it insisted last year that there is a mark-up of only four pence a litre on the fuel it brings
Mr Carmichael added: “Of course I realise that even with this measure in place we shall still be paying more for our fuel than mainland communities. This demonstration of commitment by the government does now put real pressure on the wholesalers and distributors to cooperate with the government.”
Although the five pence reduction would bring the price of fuel closer in line to that paid in mainland areas, the coalition government’s move to increase VAT from 17.5 per cent to 20 per cent will see the cost at the pump rise by over three pence throughout the UK from January.