Fuel distributor ‘profiteering’ with large price increases before introduction of duty discount
Fuel company GB Oils has been accused of profiteering by increasing prices for petrol and diesel in Shetland in the run-up to the introduction tomorrow of the islands duty rebate.
Prices at most forecourts went up by 3p last week and have risen again this week by 2p while mainland prices have increased on average by just over 2p. The duty discount, designed to cut prices by 5p a litre, has been more than five months in the planning by the Treasury.
GB Oils argued that the rises reflected the increase in the cost of a barrel of oil – Brent crude was $123 on the spot market today compared to $111 at the end of January.
But a Treasury source dismissed that claim, pointing out that the fuel in Shetland had already been paid for and delivered to the islands. The Sarnia Liberty made a delivery to Lerwick last Wednesday. “It does look pretty suspicious,” he said. “Given that [the scheme] has been planned for some time you wonder how they could be so stupid.”
Bigton-based consumer campaigner Paul Meyer said: “It sounds like profiteering to me. The problem is you can’t get to the bottom of it because GB Oils won’t open their books. They claim they are operating on tight margins but we’ll never know.
“The Office of Fair Trading is now going to look at island prices but that will take ages, maybe years. And anyway, it doesn’t have any teeth. In the meantime it just goes on and on.”
GB Oils director Sam Chambers, who is due to attend a public meeting in Shetland on 19th March, told Radio Scotland: “How can you profiteer if you are making 2.6p per litre? The margin we make is to cover our transport costs, we have drivers to pay. The public perception and reality are not exactly the same.
“We are quite prepared for our company’s figures to be scrutinised by anyone independently as to what we actually charge. We do not set the retail price on the islands – they are set by the retailers. We import it and we sell it, and we do it, we think, to the best of our ability.”
He added: “The main people who make money out of fuel are Her Majesty’s government. There is 20 per cent VAT and there’s 57.9p duty on it.”
Official figures published by the European Comission yesterday confirmed that British motorists pay the highest fuel taxes in Europe, with 60 per cent of the price of unleaded petrol and 58 per cent of diesel made up of fuel duty and VAT. This has risen by more than 20 per cent since 2001. If there was no fuel duty and VAT motorists would pay just 59.8 pence per litre for diesel and 52.8 pence per litre for petrol.
Isles MP Alistair Carmichael said: “Now public money is going into the provision of road fuels in Shetland, and with public money there must come accountability. Anybody who is seen to be abusing this system in any way needs to be made to account for that.”
MSP Tavish Scott said: “If Shetlanders don’t see a 5p fall in the difference between Aberdeen and Lerwick tomorrow then somebody is profiteering at local motorists’ expense.”
He welcomed the commitment by Mr Chambers to open his distribution company’s books so that islanders can see what his company makes.
He added: “Nothing is more important to the islands’ economy and everything we do than the price of fuel. The OFT are now looking at the wider costs we face as islanders but I have always wanted them to focus on fuel. An OFT investigation can go hand-in-hand with Scottish Fuels’ welcome commitment to open their books so that we can understand why we pay so much more than Aberdeen. But tomorrow when the 5p fuel duty cut comes in then the price difference between Shetland and Aberdeen should fall by 5p. Otherwise someone is at it.”