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The truths they don't want you to read....

Monday, September 19, 2011

The price of fuel

Everyone is complaining, and getting on the band wagon, but no-one seems to have any sensible suggestions about how to ensure that there is no profiteering or price fixing bey either the sole supplier, nor by the individual petrol stations.

Until now.

The problem is that cutting the price by subsidising the petrol stations is going to make many of them unviable, as the impact on their cash flow will be very severe whilst they wait for the refunds from the Government.

I've previously suggested that Transport Scotland can be used to deliver the subsidies partly in advance and partly in arrears, in much the same way that they rebate Fuel Duty to bus operators.

Unfortunately, the Scottish Government seem not to want to get involved, and political point scoring is higher up the agenda of our parliamentarians than actually coming up with a working answer.

This is the cheapest and easiest solution but one which requires the two parliaments to agree, and for those reasons, the politicians won't let it happen.

Option 2 is much more expensive, but gives a long term solution to additional issues.

The Council (or HIE or the Scottish Government) build new fuel tanks at Arnish and announce the closure of the oil depot in the centre of town for Health and Safety reasons.  As well as sheer aesthetics.  The tanks are then put out for a 5-year lease to anyone, with tenderers asked to deliver fuel to Lewis on the basis of ex-Grangemouth +x% or xp per litre.  That's the delivery price on the island, and the winner bidder has to cover their costs inside that margin on an open-books basis.

To control the petrol stations, the Comhairle need to put their supply of petrol out to tender on an annual basis and to return to publicising the price of petrol at the various filling stations, thereby encouraging the passing on the maximum savings.

We have monopolies and oligopolies of supply here.  We can't break that structure (easily) but by changing the relationship between the parties - by giving the public the maximum information and by using economic levers to discourage bad behaviour, there is the opportunity to maximise the return for us all.


I know the situation in Uist will be unaffected by this change, at least immediately.

There is also an issue about the discounts each petrol station has negotiated from their supplier. 

Finally, the last thing we want is any more station closures, especially in rural areas.  This might mean a flat delivery charge for anywhere in the islands to protect rural stations, which means slightly higher prices in Stornoway and lower outside. 

Owning a petrol station is not a licence to print money: there's a tiny margin so you need a huge volume.  We are that volume.


Anonymous said...

I thought profiteering was too strong a word but judging by the stories in the Heb News it is entirely appropriate. Islanders are taken for mug-punters again.

Anonymous said...

Excellent letter on Heb News 21/09/11. Brings out some stark forcasts of how big the Scottish Fuels (Irish/Grangemouth cartel) rip off is.

Anonymous said...

Just back from Inverness; 30p per litre difference between the forecourt price there and Uist. The differential would have been even higher if we had used a further discount offered by shopping in Tesco.

You could post the petrol home from Inverness and it would still be cheaper than the islands.

Anonymous said...

Refer to Iain X's blog. For too long we have been given complicated explanations about tax, derogation, transport costs, Libya etc. All along the explanation was quite simple: One big scam. No wonder our Leader has not had much to say on the subject.