No abuse by fuel suppliers, OFT finds

The Office of Fair Trading (OFT) has failed to prove that fuel suppliers are abusing their position in Shetland and other rural areas. However, a door has been left open for consumers to provide evidence which may point to market distortion.

Members of the council’s ZetTrans committee heard today that the OFT had found a large differential between island pump prices and those on the mainland. But there was no evidence of a distortion of competition.

A report before the transport body said the OFT was writing to those who had made “unsubstantiated statements” during the consultation period, advising them of the “relevant law and inviting them to provide specific evidence or any market distortion or abuse”.

Shetland Central councillor David Sandison believed the OFT had been disappointed that there was not enough evidence to back up what people had claimed.

Mr Sandison said: “It strikes me that in some places in this text they [the OFT] are almost suggesting they’d like to go back and lead people and keep them informed of how they would like people to substantiate their claims.”

Lerwick North member Allan Wishart, who at the beginning of the meeting regained his position as ZetTrans chairman, agreed with that. He said an attempt was being made to “bottom this out”.

Transport forum adviser Jimmy Smith drew on his experience on the Sumburgh Airport Consultative Committee, and insisted competition was the only way of getting a fair deal for consumers. “Competition would sort it out,” Mr Smith said. “When Business Air was running running up here you’d get to Aberdeen very cheaply.”

Fellow member Sandra Laurenson admitted she had been confused by forum meetings where the way of setting charges were supposed to be made clear. Other members also admitted they had struggled as well. The head of GB Oils, Sam Chambers, recently visited the isles to defend his company against accusations of monopoly abuse.

Michael Stout, who will now serve as Mr Wishart’s vice-chairman on ZetTrans, said the public perception was still one of confusion.

Overall, the meeting heard that the OFT had set out to seek evidence of monopoly abuse, and not specifically the fare structure set out by suppliers.

The OFT found that higher prices and limited choice result from low sales volumes and weak competition, with some businesses having local monopolies. Its report to councillors acknowledges that the problems identified do not all fall within the OFT’s remit because, for example, they do not relate to illegal or anti-competitive behaviour.

OFT director Kyla Brand stated: “There is no quick-fix solution within the OFT’s powers but we have a part to play, alongside businesses, communities and government bodies.

“We have taken, and will continue to take, action ourselves to address these concerns and will share our report with government departments, local authorities, community groups and others to help ensure that this consultation informs policy discussions.”


Add Your Comment
  • Colin Hunter

    • June 11th, 2012 22:24

    If, as Mr Chambers claims, the cost of transporting Fuel to Shetland by sea adds 2.7 pence to the price of a litre, then that is how much extra it should cost. All the other costs are the same as on the mainland. Distribution depots, Road tanker fleet purchase and maintenance, Drivers and other employee wages all exist on the mainland, same as here. Whatever the price of fuel at the pumps in Grangemouth is, it should be that, plus 2.7 pence in Lerwick. Mainland distributors make a profit delivering fuel, the retailers make a profit, and the only difference to us is the Tanker that carries it to Lerwick. The same people who take a cut of the pump price exist there as they do here. 2.7pence! Where’s the rest of the difference gone?

  • Jonathan wills

    • June 11th, 2012 22:30

    This prompts the thought: “What is the point of having an Office of Fair Trading if it can’t understand something as simple and obvious as the fuel monopoly racket in Shetland?”

    Little has changed since my friend Drew Ratter explained the outrageous price of diesel in Unst, many years ago: “I doot dir sendin’ it nort in wan gallon cans bi first class post!”


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