Demands for inquiry as fuel prices in Shetland remain much higher than in other island groups

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The cost of fuel at Shetland’s filling stations remained higher than in other island groups today despite the official introduction of the long-awaited 5p a litre rebate scheme.

An analysis by The Shetland Times of petrol and diesel costs here compared with those in the Western Isles, Skye and Orkney showed the burden of filling up in the isles is still greater than in similar rural areas.

Motorists filling up with diesel from Leasks filling station in Lerwick today were forced to pay £1.52.9 for every litre they bought, while those with petrol-powered cars paid £1.45.9.

Meanwhile their Western Isles counterparts filling up at Loch Services Ltd in Lewis were paying five pence less for diesel, at £1.47.9, while unleaded was retailing at £1.37.9 per litre.

In Skye, the Athol Service Station was offering diesel at £1.44.9, while the price of petrol came in at just £1.36.9.

In Orkney the price of diesel was standing today at £1.47.9 from Pickaquoy Road in Kirkwall, with petrol at just £1.41.9.

The prices had all been reduced as a result of the derogation scheme, whereas those in Shetland remained resolutely high following increases amounting to 5p over the last two weeks.

This week the head of Shetland’s sole fuel supplier GB Oils, Sam Chambers, was accused of profiteering by increasing prices of petrol and diesel in the run-up to today’s introduction of the scheme.

Prices at most forecourts went up by 3p last week and again this week by 2p, while mainland prices increased, on average, by just over 2p.

Fuel retailers defended their stance, insisting they had brought down the price of fuel weeks in advance after taking the lead from garages in the North Mainland which said they had increased the rebate scheme early.

But the striking difference will still come as a major disappointment to motorists in Shetland who have been struggling with high fuel prices for years and represents a public relations setback for isles MP Alistair Carmichael who has fought for such a scheme for years.

Chairman of Shetland’s transport partnership ZetTrans, Allan Wishart, said he was “perplexed” to hear prices remained so high in the isles.

“I’m completely perplexed because the 5p reduction is at least a step in the right direction, given the exceedingly high prices here. It’s not going to make a huge difference but it is very welcome. What’s causing real concern is that we have lost it instantly because prices have gone up this week.

“What I was trying to find out was how this compares with prices on the mainland. That’s one thing, but to hear prices in the Western Isles and Skye have come down makes me think there must be an independent inquiry into what’s going on here. We need answers as to whether there is something ‘going on’ or whether there is a genuine reason for the price levels we find here.”

Mr Carmichael today maintained GB Oils had abused its position.

“There was always concern that any scheme could be open to abuse. The fact that it could apparently be abused in such a blatant and early manner, I had never actually believed,” he said.

“If the price of petrol and diesel has gone up by 5p in the last week, it should have gone up for everyone.

“The distributors and wholesalers have to explain why these increases are necessary. I don’t think it’s good enough for them to do as they did [on Wednesday] and say these are the sort of margins we have. They have to explain specifically why that 5p increase is necessary.”

Chief Secretary to the Treasury Danny Alexander, who was in Skye to officially launch the derogation scheme, said any profiteering would be completely unacceptable.

“If there is profiteering going on that is truly appalling, and I will certainly ask my officials to make contact with the people who have been complaining so we can look at whether or not that is what’s going on.

“It would be totally unacceptable if anyone was seeking to profiteer off this. This discount is being provided by the coalition government to ensure islanders have a reduction in their fuel costs, not so people can make a substantial profit off the back of it.”

This week Mr Chambers, who is due to attend a public meeting in Shetland on 19th March, defended his company’s position, insisting his profit margins were reasonable.

Isles MSP Tavish Scott said: “There’s a sense of disappointment in Shetland that the difference between our prices and mainland and other island prices still remains so high. This serves to take the case for the UK government investigating why that is so, because people here want to see some genuine relief from the very high cost of motoring.”

Today a statement from the Automobile Association said a “full blown inquiry” into pricing across the UK was called for.

AA president Edmund King said: “It comes as no surprise that accusations of profiteering are flying around after the 5p rural fuel duty rebate was officially passed on to drivers yesterday – the AA predicted this would happen as there is no transparency in wholesale and retail fuel markets, unlike in the USA, Australia and South East Asia.

“Higher oil prices have driven up road fuel prices and diesel prices have suffered even more because of seasonal and supply difficulties. The fuel supplier will have been forced to pass those on, but whether increases reflect fairly market conditions is something the islanders will simply never know.”


Add Your Comment
  • Allen Fraser

    • March 1st, 2012 17:41

    Dear Mr Carmichael;

    The 5p cut for remote islands has come and gone and I’m paying more for fuel today (1st March) than I was a month ago. Of course GB Oils has been suspected of taking the subsidy for themselves as I said would happen in a letter some time ago.

    I have no doubt that when (if ever) the long overdue OFT investigation to GB Oils takes place their books well have been so well cooked that several years down the line from now the OFT will tell us nothing untoward was found. I think as far as the remote areas are concerned the cut should have been 10p not 5p and we shouldn’t have go cap in hand to Brussels to have a level playing field for local businesses.

    The real villain is the UK government whose high fuel tax and VAT is strangling small businesses such mine as all over the UK, that is why I ask that you support the Fair Fuel Campaign.

    Petrol & diesel prices are approaching record levels and causing misery. I understand that the campaign has commissioned a report from the highly respected Centre for Economic and Business Research (CEBR) that shows that even the Government itself would benefit from a cut in petrol & diesel taxes. The headline findings of the report were that even a modest cut of 2.5 p per litre would create a staggering 180,000 new jobs and give a real boost to the economy.

    I believe that this report is a ‘game changer’ in how the Government should think about fuel duty. These findings back up our argument that we need to cut duty as a matter of urgency.

    The FairFuelUK team gave these initial report findings to the Treasury on February 28th at a meeting with the Minister Chloe Smith MP. They will be forwarding a copy of the report to all MPs during the morning of Monday 5th March.

    As a constituent, I respectfully urge you to read this report and press the Government to take action on it. I understand that a whole range of tax issues are being discussed at Westminster. However, I hold the view that cutting fuel duty is a top priority for the economy.

    Please help take the opportunity that this report presents.

    Kind regards,
    Allen Fraser
    Shetland Geotours


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