A public inquiry should be held into GB Oils’ pricing structure amid claims the company is massively overcharging its customers in the isles.
Consumer expert Paul Meyer said the company pays 0.021p – just over two per cent of a penny – for every litre of fuel it ships up to the isles.
Mr Meyer said the inquiry was needed to establish how the monopoly operator justifies charging motorists 20p more at the pumps than their mainland counterparts. He also called on the government to subsidise the cost of transporting fuel to Shetland.
In a letter to isles MP Alistair Carmichael, Mr Meyer – who edits the rip-off Britain web-site on www.rip-off.co.uk – said reducing fuel duty could only do so much to help curb high prices in the isles.
He wrote: “We have known.. that GB Oils and their Irish-based monopoly have been ripping us islanders off for years, and we all knew from speaking to ‘insiders’ that the cost was less than one penny a litre to transport fuel to Shetland by bulk shipping tanker. Now I have the proof that the information we all assumed was correct, is correct.
“Notwithstanding the distribution costs within Shetland and the small profit made by service stations on Shetland (some of which are owned by GB Oils), it is clear that the cost of fuel on Shetland should not be around 20p a litre more than the mainland.”
Motorists and businesses such as haulage firms have been struggling to cover the cost of filling their tanks for years. The matter came to a head in recent weeks when a litre of diesel went beyond the £1.50 mark, despite a 1p fuel duty cut in the spring budget and further pledges for a 5p reduction. Diesel here is still around £1.52.9 a litre with the cost of petrol just a few pence behind.
“In light of these revelations I would urge you to contact your Scottish counterpart [Tavish Scott] and pursue to have a formal public inquiry regarding GB Oils pricing structure to ascertain how they justify charging what they do for fuel and its associated transportation and distribution costs,” Mr Meyer’s letter added.
“Indeed, instead of dilly-dallying around with a five pence reduction in fuel duty it can be established that the actual cost of fuel to the consumer in reality should be only five pence to seven pence a litre, instead of 20p a litre more than the mainland.
“Would it not make more sense for the government to subsidise five pence a litre to reduce the bulk transportation cost of fuel to Shetland?
“This would not require EU approval – and, indeed, if it can be shown in a public inquiry that GB Oils has, and is, grossly overcharging for their fuel, it could provide an almost level playing-field for fuel prices in the whole of Scotland, and not just the Northern Isles.
“High fuel prices are a massive burden to both Shetland’s consumers, local businesses and the local economy as a whole.”
Last month Mr Scott renewed calls for the Office of Fair Trading to look into GB Oils over the possibility it could be abusing its monopoly position.
Now Mr Carmichael has echoed the calls, adding he took Mr Meyer’s claims “very seriously”.
“I think he’s absolutely right,” Mr Carmichael said. “I think we do need some sort of public inquiry.
“First of all we should take this to the OFT, but if that’s not acted upon, then there’s a need for some sort of public hearing on these issues.
“Whether that would be through a parliamentary committee, or through some sort of inquiry, I don’t know, but it’s got to be done.”
Referring to the figures laid out by Mr Meyer he said: “There are some elements which would contribute to a slightly higher price in the market than just the transport.
“We’ve always known the structure of the market in Orkney and Shetland, where we have a lot of small businesses as opposed to a small number of big businesses, is one which tends to produce higher prices.
“The economies of scale are not there and, secondly, the purchasing power of smaller businesses is not great.
“But I’ve never believed for one second that these issues alone constitute the difference between prices in Shetland and mainland Scotland. I’ve always believed there was some underlying commercial reason.”
Chairman of the Shetland branch of the Federation of Small Businesses, Jimmy Smith, said an inquiry would establish, once and for all, the reasons behind the premium Shetland motorists were asked to cough up for their fuel.
“I would back that to the hilt,” Mr Smith said. “If everything was in public view and the actual figures were there, I really would like that.”
News last year that Tesco may look to set up its own filling station in Lerwick raised hopes that cheaper fuel may become available through the supermarket giant. Local manager Paul Clellend said he was still keen to see a filling station set up in the town, although there were no firm plans at the moment.
GB Oils failed to respond to calls from The Shetland Times before going to press.