Fuel watchdog may investigate isles prices

The Office of Fair Trading (OFT) is considering launching an investigation into high fuel prices as Shetland’s sole supplier continues to maintain its stranglehold on the local market.

MSP Tavish Scott has held talks with the OFT’s Scottish representatives amid ongoing fears that Scottish Fuels, part of GB Oils and both of which are part of Irish company DCC, is abusing its dominant position.

The cost of filling up at the pumps continues to be a nightmare for motorists across the isles, despite the recent pledge of a 5p per litre tax reduction by the coalition government.

Customers filling up in Baltasound are currently charged 156.5 pence per litre for unleaded and 159.2 pence for diesel – up to 20 pence more than the UK average.

Mr Scott said such a situation could not be allowed to continue. “Asda today cut the price of fuel by 2p a litre. Shetland doesn’t have supermarket competition. But transporting fuel to Shetland from the UK mainland and the mark-up that local garages make doesn’t explain the 20p a litre difference between Aberdeen and Shetland.

“I’ve asked the Office of Fair Trading (OFT) to explore this difference. An Irish company called DCC owns Scottish Fuels. They bring fuel into Shetland. This company should be asked to open their books and explain the difference.

“The OFT can investigate an abuse of a dominant position. So where one company effectively has a monopoly and we are all paying through the nose because of that monopoly, the argument in favour of an investigation is overwhelming.

“I am pleased that following today’s discussion, the OFT is going to explore the facts and consider whether to instigate a full investigation. I’m sure that every Shetland garage would co-operate with an investigation because I suspect it will show how much money Scottish Fuels are making at the motorists’ expense.”

Mr Scott said GB Oils had a “massive hold” on the Scottish fuel market, including Shetland, and this monopoly of distribution was having an unfair impact on motorists. In addition, although oil prices were in a current downward trend, this was not filtering through to the prices at the pumps; prices which were quick to rise if the price of oil increases.

He said: “Customers have had enough. My constituents have had enough. I can understand their frustrations – motorists in the remote isles consider their car to be a lifeline to shops, businesses and services yet, despite having an oil terminal on the doorstep, the price of fuel in Shetland is exorbitant.

“Even proposed EU subsidies, while welcomed, will not lower Shetland prices in line with the UK average. The OFT has to look at this issue again; ‘fair’ is, after all, their middle name.”

Mr Scott said a recent court case found DCC had been acting inappropriately when providing supposedly independent advice to consumers over heating oil prices.

The company had set up a price comparison website and then claimed on it that their heating oil was the cheapest, he added.

“The cost of heating oil is a huge issue for Shetland and I am pleased that the OFT has carried out a market investigation which is due to be published next month. As heating oil is delivered by Scottish Fuels, then its price and the petrol price are affected by the same factor – a monopoly.

“As the UK government brings down fuel prices by 5p with the tax change now approved by the European Commission, it would unacceptable for that reduction to be overtaken by an increase in Scottish Fuels profits.”