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Pressure grows for local fuel inquiry

PRESSURE is growing on the Office of Fair Trading (OFT) to investigate the high price of road fuel in Shetland and Orkney after the watchdog claimed on Wednesday that pricing was fair.

Northern isles MP Alistair Carmichael said islanders would take little comfort from the report, which said the fuel market was working “relatively effectively”.

Fuel prices in Shetland this week were 140p per litre compared to 129p in Aberdeen. This is despite the 5p derogation enjoyed by the islands, making the real differential 16p per litre.

Northern isles MP Alistair Carmichael

Carmichael is calling on the OFT to extend a special investigation into fuel pricing in the western isles so that it includes the northern isles.

He intends to raise the issue at a major fuel summit in Glasgow on Thursday with MPs, fuel wholsesalers and the OFT, organised by the UK government’s Scottish Office.

Meanwhile independent highlands and islands MSP Jean Urquhart has renewed the call for a fuel duty regulator to be brought in for the region.

The OFT report follows a detailed inquiry into the £47 billion road fuel market, which began taking evidence in September last year.

On Wednesday it concluded that rises in pump prices over the past decade had been largely caused by higher crude oil prices and increases in tax and fuel duty, rather than a lack of competition.

However the report made it clear that action could still be taken in “some local markets if there is persuasive evidence of anti-competitive behaviour”.

Such action would most likely be taken in the western isles where the local campaign group Fair Fuel Solutions (FFS) has highlighted unfair practices by the two main wholesale suppliers Scottish Fuels and Highland Fuels.

FFS have persuaded the OFT to look again at fuel distribution in the western isles, after one retailer broke with his contract and managed to maintain his profit margin while selling fuel at up to 14p less than his rivals.

Callum Ian Macmillan of Fair Fuel Solutions outside the Scottish Fuels depot in Stornoway calling on retailers to rip up their contracts. Photo. Iain MacIver

Campaign organiser Callum Ian Macmillan said they were determined that the OFT should extend their investigation to other Scottish islands.

“If exactly the same fuel tanker is carrying exactly the same fuel from exactly the same refinery, why should the investigation be just the western isles and not Orkney and Shetland too,” Macmillan said.

He added that they had been assisted in their campaign by Carmichael, who had described the last OFT investigation into the fuel market as “superficial in the extreme”.

On Wednesday Carmichael said: “People in the Orkney and Shetland will take little comfort from the OFT’s findings.

“The fact is, many motorists in the isles buy their petrol or diesel in an environment where competition simply does not exist.
                                
“To their credit, the OFT recognised that this could be the case in the western isles and have now started a formal investigation into that particular local market.

“I see no reason why this investigation should not be extended to cover the northern isles.

“The OFT have questions to answer and I will be taking the opportunity to press them on the detail of their report at the Scottish fuel summit that the UK government will host tomorrow.”

Highlands and islands MSP Jean Urquhart

Meanwhile Jean Urquhart shifted her focus onto the high levels of fuel duty charged by the UK government, calling on Carmichael and his coalition partners to press for a fuel duty regulator in the highlands and islands.
 
“Consumers and businesses across the Highlands and Islands are being relentlessly punished by a tax regime that does not recognise the necessity of affordable fuel for the economic sustainability of the region.
 
“I urge the Liberal Democrat MPs in the highlands and islands to use what influence they have within the coalition to deliver a better deal for their constituents by introducing the fuel duty regulator the highlands and islands so desperately needs.”

OFT chief executive Clive Maxwell

In his report, OFT chief executive Clive Maxwell said: “We recognise that there has been widespread mistrust in how this market is operating.

“However, our analysis suggests that competition is working well, and rises in pump prices over the past decade or so have largely been down to increases in tax and the cost of crude oil.

“Our call for information has not identified any evidence of anti-competitive behaviour in the fuel market at a national level, where competition appears to be strong.

“There may be some issues at a local level. Where we receive evidence of potential anti-competitive behaviour we will consider taking action.

“For example, we have recently opened an investigation into the supply of road fuel in the western isles of Scotland.”

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