Motor fuel markets prices & taxes

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Abbian House, Tower Street, Tain, Ross-shire, IV19 1DY

Tel: 01862 892734

Email: [email protected]

Motor Fuel Markets

Prices & Taxes

Annual Review 2014

© Derek W Louden

May 2014

Published by Derek W Louden. All rights reserved.

May not be reproduced in whole or in part

without the permission of the author.

While every effort has been made to ensure the accuracy of the information

included in this book, the author makes no

warranty, express or implied, nor does he assume any liability for its

accuracy or completeness.

ISBN 978-0-9928748-0-3

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Contents

1) Executive Summary

2) Introduction to the UK Motor Fuel Market

3) The Motor Fuel Market in the Highlands & Islands of Scotland

4) Explaining the Urban / Rural Price Dichotomy

5) Laissez-faire and the Motor Fuel Market

6) Environmental Policy & the Fuel Duty Escalator

7) Prices and Markets in the EU

8) Squaring the Circle - Conclusions and Recommendations

Bibliography

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1) Executive Summary

This book grew from research undertaken by the author working for the Highlands & Islands

Action Group on Hydrocarbons, commonly known as HIAG. It simultaneously tackles a

number of problems in different policy areas and presents a holistic summary of the state of

motor fuel retailing in the Highlands & Islands of Scotland, in the UK and in the European

Union. It presents policy makers with a framework on which to base future strategy. This

2014 edition has been updated to take account of fuel price rises and duty escalation.

Main Findings

Vehicle ownership figures both at home and abroad continue to rise due to increasing

affluence.

Retail fuel sales peaked in 2007, constrained in part by the fuel duty escalator.

The motor fuel industry has become increasingly concentrated in fewer hands at both the

retail and the wholesale levels.

Cleaner fuels have driven out dirtier fuels.

The retail fuel network is shrinking as independent sites are forced to close.

Wholesalers & Retailers earned up to three times as much selling a litre of fuel in the

Highlands & Islands as they did on average in the UK.

The excess in 2010 was £35 million gross, over ten years it has been £350 million gross.

The OFT maintains Highlands & Islands motorists are “not paying over the odds.”

Higher margins in rural Scotland are not explained by higher costs.

Small independent sites pay far more for fuel than supermarkets.

In this regard, oil companies apply “dissimilar conditions to similar transactions.”

Regulation by the OFT has been inadequate and characterised by inaction.

Each of the players in motor fuel retailing blames the others for price problems.

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The Fuel Duty Escalator raised prices & tax receipts but didn’t cut urban pollution.

Taxes are too high in rural areas to reflect the pollution caused.

Congestion charging not higher excise duty on motor fuels is needed to reduce pollution

in urban areas.

Europe has done a good job on reducing pollution through Directives on fuel quality and

through agreements with motor manufacturers on engine emission reductions.

Government support for public transport has been inadequate.

Motor fuel prices in the UK are too high and put us at a competitive disadvantage in

relation to our European Union competitors.

Recommendations

The following recommendations have been proposed for the various policy areas:

Fuel Taxation

Scrap the Fuel Duty Escalator;

Scrap annual Budget increases to take account of inflation;

Reduce excise duty in rural areas through agreement in the European Council of

Ministers;

Competition Policy

Appoint a full-time Regulator for the fuel supply industry;

Ensure continual monitoring of prices and markets;

Implement Price Caps in rural areas;

End price discrimination against rural motorists;

Establish a purchasing co-operative for independent filling stations;

Transport Policy

Increase parking charges in urban areas (and cut fuel duty nationally);

Introduce tolls on all city centre roads (and cut fuel duty nationally);

Increase coverage & availability of public transport in urban & rural areas;

Increase frequency of services;

Improve subsidies for public transport;

Resurface crumbling non-trunk roads;

Social Policy

Provide funds to scrap older vehicles;

Re-open access to LPG conversion grants;

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Environmental Policy

Scrap the Fuel Duty Escalator;

Tackle congestion in cities through parking charges and tolls;

Improve subsidies for public transport;

Accelerate the introduction of cleaner fuels including zero emission Hydrogen;

Reduce taxes on LPG;

Regional Policy

Guarantee no more filling station closures in rural areas;

Fund tank replacement & installation of LPG tanks at all remaining independent sites;

Add rural taxis and hauliers to “essential users” list;

Use fuel duty receipts to cut prices in rural areas;

Levy high volume fuel sites to support low volume ones;

Cap fuel prices in rural areas;

Allow Local Authorities in rural areas to wholesale & retail fuels

Subsidise rural filling stations and/or improve payment terms for rural sites.

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2) Introduction to the UK Motor Fuel Market

This Chapter deals with the structure of the UK Motor Fuel Market. It will look at:

* Vehicle ownership patterns

* Trends in the Demand for Motor Fuels

* The Structure of Supply

* Supplier Retailer and Consumer Associations

* Special Features

* Recent Developments

and will round off with a brief summary.

Vehicle Ownership 1968 1973 1983 1995 2000 2005 2010

000’s of Private Cars

9,285

11,738

15,543

20,505

23,196

26,208

27,018

Ave Distance Travelled Kms

26,141

25,946

23,847

27,194

24,125

23,078

21,601

Table 2.1

Sources:

Department of Transport (2009) "Transport Statistics of Great Britain", London, HMSO (Page 14, Table 1.1)

Department of Transport (1997) (1999) (2003) "Vehicle Licensing Statistics", London, HMSO (Page 1, Table 1) Department of Transport (2010) "Vehicle Licensing Statistics 2009", London, HMSO (Page 13-14, Table 6)

Vehicle Licensing Statistics http://www.dft.gov.uk/statistics/series/vehicle-licensing Table VEH0102

The above table and the following column chart (fig 2.1) show that private vehicle ownership

in Great Britain has almost trebled since 1968. Over the period between 1968 and 2010,

passenger kms travelled by Cars, Vans and Taxis more than doubled from 279 Bn kms per

annum to 680 Bn kms per annum, (Source: Department of Transport

www.dft.gov.uk/statistics/releases/tsgb-2011-modal-comparisons). The table in "Social

Trends" also showed that this increase was entirely due to a growth in car travel, and that

there had been a significant fall in the number of passenger kilometres travelled by coach.

http://www.dft.gov.uk/statistics/series/vehicle-licensing

http://www.dft.gov.uk/statistics/releases/tsgb-2011-modal-comparisons

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Trends in Demand

Fuel economy figures are assumed to have improved significantly over the last twenty years.

The Royal Commission on Environmental Pollution, Eighteenth Report (1994) "Transport

and the Environment," London, HMSO, showed a significant fall from 9 litres per hundred

kilometres in 1978 to around 7.4 litres per hundred kilometres in 1987. Thereafter,

consumption began to rise again due to a number of factors, namely a rise in car body weight,

a rise in average engine size from 1396cc in 1973 to 1540cc in 1992, both of these being

reflected in a switch in consumer preferences in favour of big four wheel drive MPV's.

Following a slow down in growth in car numbers in the early 1990's, during a major

recession, private car registrations have been increasing again in recent years. The following

graph (fig 2.2) "UK Total Fuel Sales," shows that fuel deliveries are higher than when we last

looked at the market in 2001. The effect of drastic increases in duty, under successive

Government's Fuel Duty Escalator have started to reduce the demand for fuel which fell by

almost 10.00% between 2007’s peak at 39.47m tonnes and 2011.

Petrol purchases were a weekly average of £9.55 per UK household in 1993 (CSO, "Social

Trends," op cit., table 12.23). By 1996, household expenditure had risen to £10.73 per

household per week (Source: Rural Scotland Expenditure Survey, quoted in EKOS Ltd.

(2000) "Economic Impacts of Road Fuel Prices in the Highlands and Islands," Inverness,

EKOS). Since the last time we looked at this market, retail fuel sales (fig 2.3) have increased

significantly. Over the same period since 1995, commercial fuel sales have fallen (fig 2.4).

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Structure of Supply

The structure of supply in the UK motor fuel market has three key elements. These are

refining, wholesale distribution and retailing. Refining has been a major problem area for oil

companies in recent years. Excessive investment in the 1960's and early 1970's has left the

market with a legacy of over capacity. The sector is frequently mentioned as a problem area

in company reports. In a relatively flat market, the oversupply of motor fuel products has

increased over time by a decrease in demand induced by duty rises. This has led to a wave of

downstream consolidation and closure of several refineries across Europe. Mergers of their

downstream interests were undertaken by the likes of BP and Mobil which were aimed at

improving economics in the European market. Further company mergers followed and

in recent years, market concentration has increased still further. Exxon and Mobil merged,

forcing BP to end its marketing agreement with Mobil. The merger of Total and Fina

to form Total Fina was followed by the Total Fina takeover of Elf Aquitane. As Mathieu

Zajdela and Souna Kang of the Paris based Petroleum Finance Company commented:

"Two factors in particular are likely to constrain the potential for further improvement of

retail profitability. First, the structural surplus of refined product (particularly for gasoline),

as well as the wealth of logistical infrastructure, has remained largely unaffected. Only a

substantial reduction of refining capacity could lead to an appreciable shift in the

supply/demand balance. Second, although oil companies still control three-quarters of the

motor fuel retail market, they remain vulnerable to the strategy pursued by hypermarket

operators - retail price standards (and thus margin levels) are set by hypermarket forecourts."

(quoted in "Petroleum Review" (2000) "UK Retail Marketing Survey," London, Institute of

Petroleum). It remains the case that there is too much supply. This has led to a re-assessment

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by oil companies as to what they gain from being in the refining business and a decision by a

number of them to get out.

BP sold the Grangemouth Refinery to Ineos in December 2005 in a deal which valued the site

at $9Bn.

BP also sold the Coryton Refinery to Petroplus in June 2007 for £714.6 million. Petroplus has

filed for bankruptcy due to problems at this and all its other refineries round Europe.

Shell sold the Stanlow Refinery to Essar Energy from India in 2011 for a reported $1.3Bn.

Also in 2011, Chevron sold the Pembroke Refinery to the American Valero Corporation for a

reported £750 million.

There are several factors at play here. Firstly, there is the general problem of oversupply in

the European marketplace. Secondly, there are issues with the price of crude oil which

provides the feedstock for the refineries. This has risen steeply in recent years caused by

increases in global demand from China in particular and also from more local factors such as

the rapid and irreversible decline in North Sea output. Thirdly, the retail sector is increasingly

dominated by the supermarket firms who seek to drive down refinery margins to increase

their own. Oil Majors are increasingly choosing to focus on Exploration and Production and

will spend less and less time and money on capital intensive refinery operations offering poor

rewards.

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Wholesaling

The 1990 investigation by the Monopolies and Mergers Commission identified over seventy

wholesalers operating in the UK market (MMC (1990) "The Supply of Petrol," London,

HMSO). These fell into three distinct categories, Majors, Mini-majors and non-refining

wholesalers. The five largest wholesalers, classed as majors: Esso, Shell, BP, Texaco and

Mobil together supplied 65.6% of the retail market in 1998. The mini-majors: Conoco, Total,

Petrofina, Gulf, Amoco and Murco supplied a further 19.9%. The remaining 14.5% was

supplied by the non-refining wholesalers, principally Burmah, Elf and Kuwait.

Comparative figures are shown to demonstrate the major movements in retail networks since

the MMC Report in 1990. These are shown on the attached graph, (fig 2.7). No figures are

available for volumes supplied by each wholesaler. This information is commercially

confidential and closely guarded. Some of the more significant features are highlighted.

Mobil, Gulf, Amoco and Burmah all withdrew from the market between 1988 and 1999.

UK and Save entered the market post 1988. UK then expanded their network between 1995

and 1999, whereas Save saw a large reduction in the number of sites under their control. UK

is now run by GB Oils who also run the former Gulf network. Save has ceased to trade. Elf

and Fina disappeared as brands following their takeover by Total. Q8 has also dropped out in

recent years. BP has moved from third to first place in the list of Company sites supplied in a

market in which the number of sites continues to decline.

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The chart fails to show the importance of the entry of supermarkets. They have established a

network of outlets with very high levels of throughput. The Office of Fair Trading has

estimated that the average throughput at a supermarket site is three times that of a company

owned site and eight times that of a dealer owned site. They estimated market share

enjoyed by supermarkets to be 23% of the total UK market in year 2000. This has continued

to grow in recent years reaching 41% by 2012.

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ESSO13.2%

MURCO1.7%

SHELL14.9%

BP10.9%

GULF1.8%

TEXACO7.1%

JET/CONOCO5.4%

MOBIL4.6%

TOTALFINA/ELF11.3%

Q8 (KUW AIT)5.6% AMOCO

1.4%

BURMAH7.3%

OTHER14.8%

Source: Adapted from MMC Report (1990) "T he Supply of Petro l"

Retail Outlets Supplied (1988)Percentag e Share of UK Market

fig (2.7m/1)

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fig (2.7m/2)

ESSO12.5%

MURCO2.9%

SHELL11.7%BP

8.4%

Q8 (KUWAIT)3.3%

SAVE7.0%

TEXACO6.1%

UK5.0%

JET/CONOCO4.4%

MOBIL4.3%

TOTALFINA/ELF10.6%

GULF2.7%

OTHER20.9%

Source: Adapted from "Petroleum Review" (1996) Retail Marketing Survey

Retail Outlets Supplied (1995)Percentage Share of UK Market

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fig (2.7m/3)

ESSO

11.8%

MURCO

2.8%

SHELL

10.1%

BP

11.1%

SAVE

3.2%

TEXACO

9.9%

UK

6.3%

JET/CONOCO

4.2%

TOTALFINA/ELF

10.5% Q8 (KUWAIT)

2.9%

OTHER

27.3%

Source: Adapted from "Petroleum Review" (2000) Retail Marketing Survey

Retail Outlets Supplied (1999)Percentage Share of UK Market

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fig (2.7m/4)

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Retailing

The situation in the retailing sector is attested to by the following graphs, (figs 2.8, 2.9 and

2.10). The first clearly shows the decline in the number of sites selling petrol in the UK

between 1986 and 2011. This is to a large extent accounted for by the rise of supermarket

outlets. These have increased in number from zero in 1964 to an estimated 1,316 in 2011.

The second graph also reflects their arrival, it shows site petrol throughput between 1986 and

2011 and details the rise in volume to a peak in 2007 followed by a decline as motorists

switched to diesel. The third chart (fig 2.10) shows the huge increase in Diesel sales over the

period. These quadrupled between 1996 and 2011.

The most important change in the retail sector over the period is the move from a high

number of low volume sites to a low number of high volume sites. The supermarket

sites were estimated to have increased the market share of the supermarket sector from 5% in

1990 to 45% in 2011. It is anticipated that this trend will moderate over the next few years.

Supermarkets in the UK now enjoy a market share which those in France achieved in 1995.

As part of the process of change, oil majors have continued to prune their networks, closing

unprofitable sites and concentrating on a small number of strategically located high volume

outlets. Where they find outlets, particularly independently owned ones supplied by them

offering low returns, they will continue to allow these sites to close. If their overall returns

from the downstream sector fail to satisfy, then as we have seen above they will exit the

market. Burmah, Mobil, Gulf, Amoco, Q8, Texaco and Chevron have all pursued this

strategic option in recent years.

The Total-Fina-Elf combination was an attempt to find economies from merging with

competitors and finding synergies. This approach has now been superseded by outright sales.

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A variety of graphs are used to show the change in the structure of the market in recent

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years. Major movements in retail networks are shown in fig 2.7. A second graph 2.7s attests

to the arrival of the supermarkets.

Following these charts are four showing company percentage shares of the UK sites over

the period, the first shows the position in 1988, the second in 1995, the third in 1999 and the

final one in 2011. The analysis reflects the proliferation of small wholesalers supplying

networks of small independent filling stations and their subsequent squeezing out. Included in

the "other" category are supermarket sites, the importance of whom in terms of volume of

throughput is belied by their small number. The final (2011) chart shows these individually.

Product Sold in the UK Motor Fuel Market

There has been a major shift in the composition of demand for the various products in the

UK market. In 1986, Four-star Leaded Petrol accounted for 65.3% of the UK market, with

Diesel taking 26.8% of the market, Two-star 7.5% and Three-star 0.4% (see fig 1.11). When

we next looked at the market, the position had already begun to change. In 1995, Four-star's

share of the market had shrunk to 23.1%, Diesel accounted for 37.9% and the new grade,

Unleaded, accounted for 39.0% (see fig 1.12). The 1999 position reflected further change,

the share enjoyed by Unleaded was 51.3%, Diesel accounted for 39.7% of the market, and

the share now being passed on by Four-star to Lead Replacement Petrol is 9.0%.

Diesel in 2011 accounted for 57% of the UK market with Unleaded accounting for 41% and

Super Unleaded the remaining 2%. Diesel is expected to continue to increase its share of the

market at the expense of petrol due to the better fuel economy figures it offers in a climate of

rising crude oil prices and the fuel duty escalator.

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65.3%

0.4%

7.5%

26.8%

Four Star Three Star Two Star Derv

Source : Adapted from Petroleum Review (1996) "UK Retail Marketing Survey"

fig (2.11)

UK Motor Fuel Sales1986 : Market Share

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39.0%

23.1%

37.9%

Unleaded Four Star Derv

Source : Adapted f rom Petroleum Rev iew (1996) "UK Retail Marketing Surv ey "

fig (2.12)

UK Motor Fuel Sales1995 Market Share

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51.3%

9.0%

39.7%

Unleaded Four Star Derv

Source : Adapted f rom Petroleum Rev iew (2000) "UK Retail Marketing Surv ey "

fig (2.12a)

UK Motor Fuel Sales1999 Market Share

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Retail Price Trends

Trends in retail prices can be looked at in a variety of ways. Two methods are used here.

Firstly, we look at the trend in prices of 4-star leaded/LRP petrol, unleaded petrol and diesel

from figures supplied by the Department of Trade & Industry (DTI). These are presented in a

chart format (figs 1.13, 1.14, and 1.15) covering the period from 1960 onwards (from 1989 in

the case of unleaded). These show the effect of oil price shocks in 1974 and 1979, and

subsequent rises attributable to high inflation and tax increases. The peak in 1986 was

followed by a collapse in oil prices, the effect of which can clearly be seen in the four-star

and diesel diagrams. Since 1989, largely as a result of the dual pressures of government

revenue requirements and environmental concerns, prices have again been rising quickly. In

the last year, the effect of the fuel duty escalator has been reinforced by the rise in crude oil

prices. These have doubled over the last year, and the chart reflects the rapid run-up in retail

fuel prices which followed on from this.

The second set of diagrams, (figs 1.16, 1.17 & 1.18) looks at a breakdown in the total

revenue generated from petrol sales. They show three components. The amount earned by

the supply chain (refiner, wholesaler and retailer), the fuel duty charged per litre, and the

VAT element charged on top. The diagrams show the continued effect of the fuel duty

escalator. The main beneficiary for many years was clearly the government. The latest year's

figures show vastly increased returns to the supply chain in part through higher crude prices.

The final charts show the decline in the share of the retail market held by independent filling

station owners (figs 1.19, 1.20, 1.20a). The independent category includes the supermarket

sector, so the decline in truly independent sites will in reality be even more marked. In urban

areas, where supermarkets are continuing to compete with oil major sites, prices will remain

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33.5%

66.5%

Company Independent

Source : Adapted from MMC, (1990), The Supply of Petrol

fig (2.19)

UK Retail Site Ownership1988 Market Share

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41.2%

58.8%

Company Independent

Source : Adapted from Petroleum Review, (1996), UK Retail Marketing Survey

fig (1.20)


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43.8%

56.2%

Company Independent

Source : Adapted from Petroleum Review, (2000), UK Retail Marketing Survey

fig (2.20a)


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low. In rural areas, sites will continue to disappear. Where independent sites remain, they

will continue to suffer from purchasing diseconomies of scale and consequently prices will

remain high. The supermarkets' advantages of attractive locations, high volumes of

throughput, insignificant overheads, delayered cost structure, low advertising costs & lower

distribution costs will allow them to continue to grow their market share.

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Supplier and Retailer Organisations

The supply chain’s mouthpiece in the UK is the Petroleum Industry Association (PIA), who

are a collective organisation putting forward position papers and briefing the press on behalf

of its membership. They collate statistics covering the industry, some of which are released

into the public domain, and some of which are kept for the exclusive use of their members

and remain out of site of the general public. Apart from acting as a mouthpiece, they counter

criticism from environmental bodies, and the general public and its representatives, seeking

to present the industry in a more positive light.

See their website at: http://www.ukpia.com/home.aspx

Since the last edition, the Petrol Retailer’s Association has been reborn as RMI Petrol,

managed by Head of Petrol Julian Phillips, and chaired by RMI Chief Executive Rob

Foulston. A new RMI Petrol Executive committee has been formed.

In November 2009 Brian Madderson, Managing Director of Kent-based Top 50 independent

George Hammond Group, was named the first RMI Petrol chairman, aiming to “Reinforce

the position of RMI Petrol as the association for independent forecourt retailers, who own

and operate more than 60% of the sites around the UK”.

A brief discussion of the different categories of filling station may be appropriate at this

stage, (for a fuller treatment of these distinctions, see Caffarra, C, (1994) "Vertical Contracts

in Petrol Retailing," Oxford, Oxford Institute for Energy Studies). An agent, or commission

agent, is a person, authorised by the owner of a motor fuel retail outlet to sell that owner's

motor fuels at that outlet on a commission basis. A tenant operates a retail site on behalf of

the owner, under a tenancy agreement which can be renewed or terminated at the discretion

of the owner. The licensee agreement is similar to the agency deal but here, the licensee

purchases the product from the wholesaler and owns the product in the tanks in the ground.

http://www.ukpia.com/home.aspx

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The licensee shoulders the financial obligation of stocking the premises occupied. These

three types of agreements are the operator agreements referred to above. Where the oil

company owns a site and does not set up such an agreement, then they will simply appoint a

salaried manager.

Finally, consumer interests are looked after by the motoring organisations such as the AA and

the RAC, who act as lobbyists and campaign for a fair deal for motorists. The AA have run a

promotion publishing details of the breakdown in retail fuel prices, showing that it is the

government which pockets over 80% of the retail price. They have also published figures

comparing retail prices in Europe, showing that the UK has the highest retail prices in the

EU. The AA has called for an end to the fuel duty escalator, and has also called for more

of the revenue raised to be used for the construction and repair of roads.

Special Features - Solus Ties

The Solus Tie is a distribution contract between the wholesaler and the retailer which binds

the latter to purchase his or her supplies solely from the wholesaler. In such circumstances

retailers will, subject to the terms of the contract, be given a discount off the wholesale list

price for petrol. Alternatively, the retailer may receive a cash lump sum ostensibly to improve

the appearance of the filling station or stations being operated. If the local market is not

disrupted by the unwelcome approach of new competition, then the retailer would have him

or herself a reasonable deal. Should the retailer's position unravel with the arrival of

supermarket competition, then the outlet, as Norman Motors found out, (see below) can be

left devoid of the required support. In such circumstances, the solus tie is effectively a

suicide note for the retailer. He or she is prevented by a legally binding contract from seeking

alternative and cheaper supplies, despite the fact that the oil major may be supplying his

competitors at a much lower price (News of the World, (15/10/95) "Tanks a bundle Esso,").

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Another such case, the Bedminster case, was reported by the House of Commons Trade &

Industry Committee, (House of Commons, Trade & Industry Committee, (1996), p17).

Such a system seems illogical when legal redress could only arrive far too late for

it to be of any possible benefit to the, by then, bankrupt retailer was checked out and

approved by the UK regulatory triumvirate of the DTI, MMC (now the Competition

Commission) and OFT.

The "umbrella exemption" granted to the oil companies by European Commissioner Mario

Monti (22/12/99) meant that the old "block exemption" for exclusive distribution

agreements had effectively been renewed in all but the most extreme cases, where one

company has over 30% of national market share. The then PRA Director Ray Holloway

commented that he was "disappointed" by the decision, which will prevent service stations

shopping around for fuel and will assist in the continuing decline of the independent retail

sector (reported in "Petroleum Review" Feb 2000, London, Institute of Petroleum).

Since that date a further 5,000 sites have closed, rather proving his point.

Selective Price Support

The Norman Motors case referred to above is an illustration of why the price support is

referred to as "selective." Selective Price Support (SPS), operates mainly in urban markets

where retailers are under competitive pressure from other retail outlets and more importantly,

from supermarkets. The above example, taken from a Sunday newspaper, shows the effect on

an independent retailer of the withholding of SPS by the wholesaler. In the example given,

Norman Motors operating in Ferndown, Hants. found itself opposite to and in direct

competition with a Sainsbury's outlet across the road. Norman Motors price was 15.4ppl

higher. Not surprisingly, given the juxtaposed alternative supply, customers were thin on the

forecourt. The point Chris Norman, proprietor of Norman Motors made is one we can all

47

readily appreciate and sympathise with:

"Let's put it this way - motorists who stop at Sainsbury's over the road pay less for their fuel

than I pay Esso for mine."

Without effective price support from Esso, Norman Motors could never survive. This

scenario will have been repeated up and down the country over the last few years. The nature

of SPS is that it is paid solely at the discretion of the oil company. If they want to support the

retailer, then the system will work fine. If not, then the outlet is bound to close. In such

circumstances, one would expect the retailer to shop around in search of a cheaper source of

supply. As we now know however, this option is not available to the independent retailer, as

his solus tie allows the oil company either to pay price support or not as it chooses. If the oil

company decides to, it is all too easy for them to harry independent retailers into exiting the

market.

Recent Developments

Arguments continue over the role of the Esso "PriceWatch" campaign. Originally launched as

an attempt by Esso to compete head-on with the supermarkets on price. The campaign

intensified price competition and the fears of the independent sector's spokesman at the time

would appear to have been fully justified in hindsight. Bruce Petter of the PRA had

commented:

"If, as we expect, thousands of small, independent filling stations are forced out of business,

motorists will find that they have to drive longer and longer distances to refuel." ("Forecourt,"

(Feb 1996) Rugby, PRA)

The report by the OFT into the Supply of Petrol, (OFT, (May 1998) "Competition in the

supply of petrol in the UK," London, OFT) found that the supply of petrol in the UK was

competitive and that it acted in the public interest. They found, inter alia, that that, "in the

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current climate of low margins, pricing and price competition is largely supplier driven and

that the role of the retailer is limited."

They go on:

"The MMC found that wholesalers' influence over the price of independents was less than for

company-owned sites. This would appear to be less true in the current situation where

margins are low."

This would appear to be a tacit acceptance that the wholesaler is, de facto, or de jure, setting

the price for the independent retailer, a situation known as Resale Price Maintenance.

According to the OFT, "RPM [Resale Price Maintenance] can have direct effects on

competition. Where prices are fixed absolutely, or minimum prices are specified, there will

be no price competition between the retailers affected. The Director General expects to find

all such restrictions in breach of the Chapter I prohibition and unlikely to benefit from an

exemption." (OFT, (Sept 1999) "The Competition Act 1998, Assessment of Individual

Agreements and Conduct," London, OFT 414, page 19)

They also state, with regard to vertical agreements such as exist between wholesalers and

retailers:

"vertical agreements....can produce appreciable effects on competition when combined with

market power. They can also represent an abuse when imposed by dominant undertakings."

However, in the 1998 report, the OFT responded to the crisis facing the independent sector as

follows:

"the OFT does not believe that independent retailers provide any significant benefits for

competition, [c]onsequently, we do not believe that any market restructuring which saw

independent retailers being disproportionately affected would necessarily be a cause for

concern." (OFT (1998) "Competition in the supply of petrol in the UK," op cit., p100)

It would appear from the above commentary, that the OFT would be perfectly happy if

49

pressure on the independent sector resulted in a 100% mortality response, despite the

manifest unfairness of the contractual position in which independent retailers find

themselves.

OFT Reviews 2011 - 2013

The OFT conducted a further review of the market in rural areas in 2011. Titled “Price and

Choice in Rural Communities – Call for Evidence”.

Source: http://www.oft.gov.uk/shared_oft/consultations/remote-communities/OFT1420.pdf

The results of the review are presented in Office of Fair Trading publication OFT1475 which

was published in January 2013. The OFT concluded: “Overall, on the basis of the evidence

collected, it appears that competition in the UK road fuels sector is working relatively

effectively. The UK has some of the cheapest prices in Europe before tax and duty, and

increases in the pump prices of petrol and diesel over the past 10 years have been caused

largely by higher crude oil prices and increases in tax and duty. The margins being made by

UK refiners, wholesalers and retailers do not appear to have contributed as significantly to

increases in pump prices.”

Source: http://www.oft.gov.uk/shared_oft/markets-work/oft1475.pdf

The findings led to a follow up investigation “Petrol and Diesel Pricing in the Scottish

Islands” – OFT1432 to which the author submitted evidence. We await the results with some

interest.

Source: http://www.oft.gov.uk/shared_oft/markets-work/OFT1432.pdf

Conclusions

The UK motor fuel market continues to deliver lower petrol prices for urban areas whilst

charging much higher prices in rural and island communities. Market concentration appears

http://www.oft.gov.uk/shared_oft/consultations/remote-communities/OFT1420.pdf

http://www.oft.gov.uk/shared_oft/markets-work/oft1475.pdf

http://www.oft.gov.uk/shared_oft/markets-work/OFT1432.pdf

50

to be increasing rather than decreasing, with non-refining wholesalers and independent

retailers continuing to vanish from the UK market. The OFT retain the view that the entire

independent sector could vanish without any action by them being appropriate. These

independent sites remain tied under solus agreements to purchase exclusively from their

competitors. In such circumstances life expectancy has been unsurprisingly short for

these independent retailers.

51

3) The Motor Fuel Market in the Highlands & Islands of Scotland

This section deals with the motor fuel market in the Highlands and Islands of Scotland. It

will look at:

* Population and Geography

* Vehicle Ownership

* The Demand for Motor Fuels

* The Structure of Supply

* Special Features of the Highlands and Islands market

* Petrol Prices

and will round off with a brief conclusion.

Population and Geography

The Highlands & Islands Scotland European Regional Development Fund Programme

Document (2007-13) states:

“One of the key challenges for the region is its settlement pattern. The Highlands & Islands

has a population density of 9.3 people per km2 (based on a geographic area of 39,050 km).

Excluding the city of Inverness, the population density for the region falls to 7.8 people per

Km2, compared to the Scottish average of 64.8 and the UK figure of 242.4. Low population

density has produced a settlement pattern of small communities, often distant from each

other, key markets and services, resulting in additional costs in the provision of goods and

services due to a lack of economies of scale and a corresponding enterprise base – an

important development constraint recognised in previous Cohesion policy through Objective

6 where the qualifying threshold was 8.

Peripherality is further exacerbated in the Highlands & Islands by the extent of the island-

based population. In 2001, the inhabited islands had a combined population of 99,494 people

living on 90 islands, some 23% of the total Highlands & Islands population. The rate of

52

population decline has been more significant on the islands with smaller populations. Thus,

while islands with a population of more than 5,000 in 2001 experienced an overall

population increase of 3% since 1961, islands with populations of less than 500 experienced

an overall fall of 20% in population over the same period. Depopulation, particularly in

fragile areas, has been shown to have an adverse effect on community confidence and service

sustainability, increasing the vulnerability of communities already experiencing acutely the

problems of high-cost service provision and market access.”

The current population of the area covered by the ERDF and ESF Programmes is as shown

in the table below:

LEC Area Population

2009

Area (square

kilometres) Population

Density Argyll & the Islands 70,543 6,965 10.1

Caithness & Sutherland 38,113 7,717 4.9

Inner Moray Firth 144,375 8,065 17.9

Lochaber 19,193

Skye 12,655 9,940 3.8

Wester Ross 6,154

Moray 87,660 2,238 39.2

Orkney 19,960 989 20.2

Shetland 22,210 1,438 15.4

Innse Gall 26,180 2,999 8.7

Highlands & Islands Total 447,043 40,351 11.1 Table 3.1

Source:

(1) Highlands & Islands Partnership Programme, (1999) Highlands & Islands Special Programme, Plan 2000-

2006, page 28, HIPP, Inverness

(2) HIE (2011) Area Profiles.

Inverness the capital of the region has a population of over 65,000 and continues to grow at a

rapid rate. The European Commission decided to exclude Inverness from the area to be

covered by the Special Programme for 2000 to 2006. Remove Inverness from the equation,

and the true emptiness of the remaining landscape begins to become clear.

53

Vehicle Ownership

Various studies have looked at the issue of car dependency in rural areas (for instance, see

Farrington et al (1998) Car Dependence in Rural Scotland, University of Aberdeen). The

area is poorly provided for in terms of access to public transport, and this has resulted in a

very high degree of reliance upon the car as the only practical method of transport in the

Highlands and Islands.

The following table has been revised to provide the most up-to-date figures available for

vehicle ownership in the Highlands and Islands, Scotland and the UK as a whole.

Local Authority Area

Private &

Light Goods

Total

Vehicles

Vehicles Population per capita

Argyll & Bute 45,200 51,400 89,200 0.58

Highland 119,400 137,900 221,630 0.62

Moray 46,400 53,700 87,720 0.61

Orkney 11,900 15,200 20,110 0.76

Shetland 13,400 15,500 22,400 0.69

Western Isles 14,500 16,800 26,190 0.64

Highlands & Islands 250,800 290,500 467,250 0.62

Scotland Total 2,364,300 2,684,700 5,222,100 0.51

GB & NI Total 32,505,734 35,170,581 62,262,000 0.56

Table 3.2

Source:

Scottish Transport Statistics (2011) Table 1.3, page 52.

GB figures from: Vehicle Licensing Statistics (http://www.dft.gov.uk/statistics/series/vehicle-licensing/) NI figures from (2011) Transport Statistics of Northern Ireland 2010-2011Table 1.1, Page 21

Population UK population 57.7 million.

The above numbers show that car ownership in the Highlands & Islands is above the UK per

capita figure, and significantly exceeds the per capita figure for Scotland as a whole.

The Demand For Motor Fuel

The previous version of this report (2001) made an estimate of the levels of motor

fuel demand in the Highlands and Islands. A more accurate attempt will be possible this time,

http://www.dft.gov.uk/statistics/series/vehicle-licensing/

54

given the considerable level of interest shown in this topic over the last few years, a variety

of statistics have come to light which can assist us. Table 3.2 above shows the number of

vehicles in the Highlands and Islands as being 290,500 out of a UK population of 35,170,581.

This would give the Highlands and Islands 0.826 of 1 percent of the UK motor fuel market if

we assumed that motor vehicles in the Highlands and Islands travelled only the UK average

number of kilometres per annum. Scottish Transport Statistics 2011 gives us the following

information in table 5.4:

Local Authority Area

Million

Vehicle

%age of

Scotland

Kms Total

Argyll & Bute 884 2.03%

Highland 2,586 5.95%

Moray 714 1.64%

Orkney 135 0.31%

Shetland 202 0.46%

Western Isles 203 0.47%

Highlands & Islands 4,724 10.86%

Scotland Total 43,488

UK Total 487,900

Table 3.3

Source:

(1) Scottish Transport Statistics 2011 Edition Table 5.4

(2) Department of Transport Traffic (http://www.dft.gov.uk/statistics/series/traffic) Table TRA0203

In 2010, 16,262 kms per vehicle were travelled on roads in the Highlands and Islands

compared with 16,198 kilometres per vehicle at the Scottish level. The Region accounts for

10.86% of Scottish road kilometres travelled but only 8.95% of the country's total population.

Scottish kms travelled account for 8.91% of the UK total. The Highlands and

Islands share of motor fuel demand using these measures would be:

UK Motor Fuel Demand = 45,019,102,787 litres(1)

of which

Scottish Motor Fuel Demand (8.91%) = 4,011,202,058 litres(2)

http://www.dft.gov.uk/statistics/series/traffic/

55

of which

Highland Motor Fuel Demand (10.86%) = 435,616,543 litres(3)

Sources: (1) Adapted from Institute of Petroleum, (2012) UK Retail Marketing Survey, page 10.

(2) Author’s own calculation as per 2001 edition.

(3) Author’s own calculation as per 2001 edition.

The above figures demonstrate that, as a consequence of the greater distances travelled in the

Highlands and Islands, the market for motor fuel represents 0.968 of one percent of the UK

market. This is a slightly higher figure than was previously estimated, but as all of the above

figures are official it is an estimate in which we can have total confidence.

The Structure of Supply

The next section in this chapter deals with the structure of supply in the Highlands and

Islands motor fuel market. Within this market, there are three major distributors

represented; Scottish Fuels (now part of GB Oils), Gleaner Oils and Highland Fuels. Since

the last time we looked at this market, BP has acquired its former All Product Distributor

(APD) S & JD Robertson and has sold the business on to the Irish company Scottish Fuels.

Our last look at this market concluded that S & JD Robertson appeared to be making higher

profits than were the norm in the industry, and this we felt was worthy of investigation.

The OFT did investigate the Highlands and Islands market in general and the Western Isles

market in detail. The conclusion the reached was:

“Higher petrol prices at the pumps in rural areas reflect lower sales volumes,

proportionately higher unit costs and higher costs of distribution. For example, most of the 4

to 5 p per litre differential in price between North West Scotland and the rest of the UK is

accounted for by this, the rest being accounted for by the intense competition in urban areas

that has developed in recent years.”

Source: OFT (1998) “Competition in the Supply of Petrol in the UK”, Page 3

Scottish Fuels

Scottish Fuels is now part of GB Oils Limited a business with a turnover of over £3Bn in the

56

year to 31/03/2011. Profits in the same year amounted to over £40m. The network now

covers the whole of the UK and attempts to dis-aggregate the Highlands and Islands

operation from the rest to assess whether or not excess profits have been earned could only be

done by a UK regulator such as the OFT.

Gleaner Oils

Shell operate in the area through Gleaner Oils Ltd, and previously, through its subsidiary

Gleaner Oils (Highland) Ltd. Shell supplied 113 of the 319 sites listed in the 1990 MMC

Report. Gleaner's activities were restricted to the mainland, although Shell sites were to be

found on the Western and Northern Isles. These sites are supplied by Scottish Fuels under a

swap arrangement where BP receives the fuel back elsewhere in the UK. Gleaner's

arrangement with Shell appears to have altered somewhat in recent years. Gleaner now

operate a number of branded sites in Ross-shire and Sutherland. These are predominantly

small sites in rural areas. Major independent sites will contract directly with Shell and have

their product delivered by Gleaner. In the Institute of Petroleum (2000) UK Retail Marketing

Survey, page 4, Gleaner were listed as operating 40 sites in North Scotland, the Highlands,

West Highlands and Islands. The 2012 Survey from the now Energy Institute shows Gleaner

operating 69 sites throughout Scotland. Gleaner’s network has expanded over the last decade

to support Shell. Gleaner had a turnover of £117 million in the year to 31st March 2010 which

earned them a pre-tax profit of £670,432. At the time of writing the first draft (March 2012)

the business had just been put up for sale by the owners who are seeking to retire.

Highland Fuels

The third major found in the area is Esso. They operate in the Highlands through Highland

Fuels, an Authorised Distributor. In common with Gleaner, Highland Fuels have a number of

sites under their own control. The Institute of Petroleum (2000) Retail Marketing Survey,

57

quoted above identified Highland Fuels as operating 7 sites in the Highlands and Islands area.

The 2012 Survey from the now Energy Institute shows Highland Fuels operating 12 sites.

Highland Fuels has entered the market in the Western Isles with a dramatic reduction being

seen in the price of fuel at the site they supply. This gives lie to the claims of Scottish Fuel

that they were not price gouging in the Western Isles. Highland Fuels actions are to be

commended in this regard.

Wholesale Market Concentration

At this stage, we should pause briefly to look at two measures of concentration in the supply

of motor fuels. The first of these is the Three-Firm Concentration Ratio. For the UK market

as a whole, this came out as 48.3% in 1988. When the OFT looked at the market again in

1997, the Three-Firm Concentration Ratio was 61.5%. This means that the three largest firms

in the industry then supplied 61.5% of the sites retailing petrol. Since that time a number of

refineries have been sold in the UK as the oil majors divested themselves of their low-margin

downstream business. These sales mean that the market will have become much less

concentrated as time has gone on.

Source: OFT (1998) Competition in the Supply of Petrol in the UK, Report No. OFT 230, Table 8.5, page 30.

In 2001 in the Highlands and Islands, the entire market was supplied by one or other of BP,

Shell and Esso. The Three-Firm Concentration Ratio in the Highlands was consequently

100%.

Since then BP, Shell and Esso have all withdrawn from the market. Independent retailers now

have to source supply from our three local wholesalers Scottish Fuels, Gleaner and Highland

Fuels. Here too the entry of supermarkets has served to greatly reduce concentration in

the industry. Concentration has fallen, price differentials have also declined in the Inner

Moray Firth. The position in more remote mainland locations and in the Northern and

58

Western Isles have not followed suit.

The second method used to measure market concentration was the Herfindahl Index. This

index, referred to as the Hirschman-Herfindahl Index in the above 1998 OFT Report provides

a measure by taking the sum of the squared value of each company's market share. The MMC

calculated this at 1,069 for the UK market in 1988. For the Highlands and Islands, the figure

was 4,071. By either of the above measures, it is clear that the motor fuel market in the

Highlands and Islands is considerably more concentrated than in the UK as a whole.

Retailing

The attached graph (fig 2.1) shows the extent of the crisis in rural petrol retailing in the

Highland Council (HC) area. It shows that between 1975 and 2011, the number of filling

stations collapsed from 348 to 97. There are three appendices to this chapter, Appendix 1

gives a map of the closures between May 1975 and Dec 2011. Appendix 2 is a list of the

sites closed over this period. Appendix 3 is a copy of the map showing sites opened and

closed between 1992 and 2011, and of the sites still in existence in 2011. At the time of the

original report in October 1996, we commented "The decline...appears set to continue, if not

to accelerate in the future" events have shown that this was indeed the case. The problem of

low levels of petrol throughput affecting sites in the Highland Council area is shown in fig

2.2. A further chart (fig 2.3) shows the age distribution of filling station tanks. This is a

problem which has been recognised by the Scottish Executive. Some funding has been

allocated under the Executive's rural transport fund to help rural filling stations with tank

replacement and groundwater problems. Expenditure in year 1998/99 was £400,000 and in

the year 1999/2000 was £700,000. This scheme was subsequently discontinued. The fund

helped a number of sites over its 10 year life. Alternative allocations will be required to

fully rectify the problem. In addition to the above help, filling stations have also benefited

from a derogation from the EU Petrol Vapour Recovery Directive. Local authorities also

59

have the power to grant discretionary rate relief of up to 100%. As can be seen from the chart

of filling station numbers, further action will need to be taken if all but a handful of sites are

not to disappear. The majority of sites have tanks which are more than 25 years old and

single skinned. Included in this category are a large number of sites which are over 40 years

old. Retailers face a choice between replacing these tanks, at very considerable cost, or

shutting down their operations entirely. In the last few years, a large number of site owners

have opted for the second option.

61

fig (3.2)

62

fig (3.3)

Age of Tanks (Years)

0

20

40

60

80

100

120

Num

ber

of

Sites

0-5

6-10

11-15

16-20

21-25

26-30

31-35

36-40

41+

Source : Highland Council, Protective Services

AGE OF EXISTING TANKS(Highland Region)

63

The map of remaining filling stations (Appendix 3) highlights the particularly vulnerable

nature of the provision in the more remote rural areas. In evidence to the Enterprise and

Lifelong Learning committee of the Scottish Parliament on Monday 31st January 2000,

Councillor Alison Magee commented:

"Unleaded fuel in Lochinver costs 83.5p per litre. The next nearest filling station is 40 miles

away."(1)

Giving evidence to the same committee Councillor Donald Maclean gave a similar example:

"A petrol station closed at Horgabost, at the south end of Harris, with the result that anyone

from the south of Harris has to travel 23 miles in each direction merely to fill their tanks."(2)

Source (1)&(2): Scottish Parliament (31/1/00) Official Report, Enterprise and Lifelong Learning Committee,

Cols. 457 & 458.

The change in shopping patterns with the development of a regional shopping hub in

Inverness has posed further challenges for motor fuel sites within easy travel distance of the

centre. Further pressure exists from the various new Tesco sites which have sprung up in the

Highlands over the last few years. Unlike Asda which has a policy of keeping prices the same

throughout the UK, Tesco has a policy of setting prices to compete locally. This won’t reduce

prices dramatically when new stores open. Prices will fall where Asda stores open.

Special Features

We have already drawn attention to the problems of peripherality and insularity in this

chapter, but what about special features in petrol retailing?

In the UK market as a whole, independent retailers make up 60% of all motor fuel outlets.

Source: http://79.170.40.172/rmif.co.uk/index.php?op=page&id=35

In the Highlands and Islands, this figure is much higher. A study by Halcrow Fox estimated

solus-tie independent sites made up 79% of the filling stations in the Highlands.

Source: Halcrow Fox (1996) Economic and Social Impact Assessment: Petroleum Prices and Distribution in the

Highlands and Islands, Edinburgh, Halcrow Fox.

http://79.170.40.172/rmif.co.uk/index.php?op=page&id=35

64

The OFT survey in 1997 found that "(a)lmost all the petrol retailers in the region are

solus-tie independents."

Source: OFT (1998), op.cit. S11.5, page 70.

Nearly all of the above filling stations will be tied to an oil company through a solus

agreement for a period of three to five years. These agreements are confidential and access to

them is extremely difficult to obtain. Those seen (not attached for reasons of confidentiality)

allowed the oil company total discretion over setting the level of price support, rebates and

discounts, as well as any block grants which the retailer might expect. In addition, should the

retailer fail to be supported by the oil major, rather than this allowing the retailer to cancel

the agreement, the contract allows the oil company to charge the retailer for release, that

portion of the block grant outstanding. Where the retailer may have sunk this into the

business prior to opening, he may be unable to find sufficient funds, particularly in the early

part of a five year contract, to permit his release.

Two further features of this market should be considered. The first is the interdependency of

garage and shop retailing. The Halcrow Fox Report above also found that over 50% of

Highland motor fuel outlets had a shop on the same site. If the filling station were to close,

the village might well also lose its shop. Where these petrol stations close, the viability of the

whole community may be called into question. Those areas most at risk are on the west coast

(see the map Appendix 3) and in the islands, where increasingly only one outlet survives due

to closures in recent years. The final point concerns the existence of localised monopolies in

petrol retailing in the Highlands and Islands. We identified in the last report, a major failing

of the 1990 MMC Report on the supply of petrol was the conclusion reached that the UK

market was one market, with one structure, and that the competitive model found in urban

locations could be considered to also apply in rural ones. The position of the competition

65

authorities on this matter has been altered to take account of the reality of the situation. The

OFT Review in 1997 included some analysis done by National Economic Research

Associates (NERA) to determine, on the basis of correlation coefficients whether the market

for motor fuels in the United Kingdom could be construed as a single market or whether it

was made up of a collection of regional markets which did not display similar price

characteristics. A fuller description of the methodology involved is provided in Office of Fair

Trading Research Paper 1, "Market Definition in UK Competition Policy" produced for the

OFT by NERA in February of 1992. Their analysis compared the movement of retail margins

in 38 towns against each other town in the series. They thus compared margins in 741 pairs

of towns. If the margins in towns move together, you would generate a figure of 1. If margins

are not moving together, a lower figure will be returned. The lower the coefficient, the less

likely it is that the two towns are part of the same market. Their work concluded:

"The low levels of correlation found for Belfast, Oban and Inverness are easy to reconcile

with there being distinct markets for the retailing of petrol in Northern Ireland....and the

Highlands and Islands of Scotland...NERA concluded that there is a separate market for

petrol retailing in...the Highlands and Islands of Scotland, particularly north west of the

Great Glen."

Source: OFT (1998) op. cit. pages 112-113.

The work done by NERA bears out what HIAG's research has been claiming. That there is a

separate market for motor fuels in the Highlands and Islands of Scotland. It is a more

profitable market, earning much higher margins for the supply chain than are the case in the

rest of the UK. The evidence which follows on prices in the Highlands and Islands bears this

out. Local monopolies exist in this market, they allow high retail prices to be set without

these higher prices having the effect of reducing the level of demand. In technical terms, the

price elasticity of demand in rural areas is lower than that found in urban areas. A site in a

66

city which increased its prices would rapidly go out of business, as a variety of alternative

sources of supply are readily available. In such circumstances, economic theory recognises a

low price strategy would be most appropriate. A site in a rural area would not be so

constrained. They would be free to set prices at a higher level without losing volume. In

terms of the theory, this site would have price inelastic demand. In such circumstances, a

high price strategy will yield the best returns. There is clear evidence on prices which bears

this out. The 1990 MMC Report (MMC, (1990) op. cit. p303) commented that:

"Were steps taken to reduce wholesale and retail prices to those prevailing elsewhere in the

United Kingdom we think it likely that this would call into question the continued involvement

of the three wholesalers and certainly result in the closure of sites."

The MMC decided to take no action on high rural prices. The rural sites far from being

protected by higher prices have been disappearing at an alarming rate. Thanks to the

inactivity of the regulators we have the highest motor fuel prices in the world and a vanishing

network of retail motor fuel outlets. We would not alter our previous assumption that the

excuse likely to be given for this turn of events would be that had it not been for the freedom

of action provided by the government's laissez-faire approach, which the oil majors have

exploited to engage in price discrimination and earn monopoly profits, the rate of closures

would have been even worse.

Petrol Prices

In this section, we consider the findings, over an extended period of time of the Rural

Scotland Price Survey (RSPS) produced by Mackay Consultants in Inverness. The RSPS

compares, amongst other things, the average price of lead replacement petrol, unleaded

petrol, and diesel with the average prices of the same motor fuels elsewhere in Scotland. This

has shown the existence of a large, and growing disparity in prices over an extended period

of time. A full listing is attached covering the period up to and including the Winter

67

1999-2000 survey. Lead Replacement Petrol prices are covered in Table 2.4 and fig 2.4

attached. These show that the highest price differentials ever recorded were following

publication of the OFT Report in 1998. This report cleared the oil majors of operating a

cartel and also cleared them of operating any anti-competitive practices. Following the

announcement of a further OFT enquiry into the Highlands and Islands market, the

differential reduced. I wrote at that time:

If the presently awaited report (May 2000) again clears the oil majors of operating a cartel,

or of operating anti-competitive practices, we would expect the differentials to resume their

upwards path.

Source: Derek Louden (2001) “Motor Fuel Markets Prices and Taxes”, Page 62

Since this was written in 2001 the differential has soared.

Unleaded prices are covered in Table 2.5 and fig 2.5. Diesel prices are covered in Table 2.6

and fig 2.6. Further figures are provided to illustrate the movement of prices on the Western

and Northern Isles (figs 2.6a, and 2.7 to 2.17). These have been updated using Highland

Council Planning & Economic Development Committee figures, and numbers from the

“Press & Journal”.

All but two of the series of charts show that price differentials have widened since we last

looked at the market.

68

LEAD REPLACEMENT PETROL PRICES

Highlands UK Difference % Above Average ppl Average ppl ppl UK Average SUMMER 1986 39.12 35.58 3.54 9.95 WINTER 1986 38.68 37.44 1.24 3.31

SUMMER 1987 39.78 37.94 1.84 4.85 WINTER 1987 39.78 37.11 2.67 7.19

SUMMER 1988 39.78 37.88 1.90 5.02 WINTER 1988 40.66 37.22 3.44 9.24

SUMMER 1989 44.40 42.34 2.06 4.87

WINTER 1989 42.64 40.52 2.12 5.23

SUMMER 1990 46.38 43.61 2.77 6.35 WINTER 1990 46.60 45.65 0.95 2.08

SUMMER 1991 53.41 50.28 3.13 6.23 WINTER 1991 53.07 48.34 4.73 9.78

SUMMER 1992 56.21 51.37 4.84 9.42 WINTER 1992 55.94 51.41 4.53 8.81

SUMMER 1993 58.30 55.18 3.12 5.65 WINTER 1993 57.65 55.14 2.51 4.55

SUMMER 1994 62.37 56.95 5.42 9.52 WINTER 1994 63.75 58.07 5.68 9.78

SUMMER 1995 66.70 60.43 6.27 10.38 WINTER 1995 65.50 60.43 5.07 8.38

SUMMER 1996 66.80 59.80 7.00 11.70 WINTER 1996 72.30 65.35 6.95 10.64

SUMMER 1997 71.90 65.39 6.51 9.96 WINTER 1997 76.50 69.55 6.95 9.99

SUMMER 1998 79.30 72.37 6.93 9.58 WINTER 1998 78.40 69.64 8.76 12.58

SUMMER 1999 83.50 78.26 5.24 6.70 WINTER 1999 87.20 80.86 6.34 7.84 SOURCES : Highlands : MacKay Consultants (Rural Scotland Price Survey)

UK : DTI - Up to & Including Winter 1996 (Summer Mean - May,June,July :

Winter Mean - Nov, Dec, Jan)

: DTI - June 1997 onwards price from DTI Energy Policy & Analysis Unit

File: LEAD100.WK4

Table 3.4

69

fig (3.4)

Source: Adapted from (1) PHH (1996) “All-star Price Survey” and (2) Mackay Consultants (2000) “Rural

Scotland Price Survey”

70

UNLEADED PETROL PRICES

Highlands UK Difference % Above Average ppl Average ppl ppl UK Average WINTER 1989 39.78 37.94 1.84 4.85 SUMMER 1990 43.52 40.71 2.81 6.90 WINTER 1990 43.96 42.66 1.30 3.05 SUMMER 1991 49.89 46.75 3.14 6.72 WINTER 1991 49.54 44.82 4.72 10.53 SUMMER 1992 51.54 46.96 4.58 9.75 WINTER 1992 51.25 47.24 4.01 8.49 SUMMER 1993 53.30 50.31 2.99 5.94 WINTER 1993 52.38 50.33 2.05 4.07 SUMMER 1994 56.17 51.53 4.64 9.00 WINTER 1994 58.55 52.60 5.95 11.31 SUMMER 1995 60.50 54.56 5.94 10.89 WINTER 1995 60.20 54.53 5.67 10.39 SUMMER 1996 61.70 54.71 6.99 12.77 WINTER 1996 67.40 60.53 6.87 11.35 SUMMER 1997 67.40 59.86 7.54 12.60 WINTER 1997 71.50 63.89 7.61 11.91 SUMMER 1998 73.10 66.04 7.06 10.69 WINTER 1998 72.80 62.90 9.90 15.74 SUMMER 1999 77.10 70.98 6.12 8.62 WINTER 1999 82.00 75.40 6.60 8.75 SUMMER 2011 142.39 132.71 9.68 7.29 FEB 2012 141.80 134.90 6.90 5.11

SOURCES : Highlands : MacKay Consultants (Rural Scotland Price Survey) Highland Council (16/03/11) PED Committee Report PED22/11, Appendix 1 Press & Journal (29/02/2012) Ups and Downs of pump prices UK : DTI -Up to & Including Winter 1996 (Summer - May, June, July :

Winter Mean - Nov, Dec, Jan)

UK : DTI - June 1997 onwards price from DTI Energy Policy & Analysis Unit

File: UNLD100.WK4 Table 3.5

71

fig (3.5)

Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland

Price Survey”, (3) Highland Council (16/03/11) PED Committee Report PED22/11, Appendix 1,

(4) Press & Journal (29/02/12) “Ups and Downs of Pump Prices”,

(5) http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx Monthly Table QEP 4.1.1

http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx

72

DIESEL PRICES

Highlands UK Difference % Above

Average ppl Average ppl ppl UK Average

WINTER 1996 70.50 61.82 8.68 14.04 SUMMER 1997 72.60 60.60 12.00 19.80 WINTER 1997 73.50 64.06 9.44 14.74 SUMMER 1998 74.50 66.94 7.56 11.29 WINTER 1998 71.60 63.96 7.64 11.94 SUMMER 1999 82.80 73.81 8.99 12.18 WINTER 1999 84.50 77.78 6.72 8.64

SUMMER 2011 147.94 137.81 10.13 7.35

FEBRUARY 2012 149.60 142.83 6.77 4.74

SOURCES : Highlands : MacKay Consultants (Rural Scotland Price Survey) Highland Council (16/03/11) PED Committee Report PED22/11, Appendix 1

Press & Journal (29/02/2012) Ups and Downs of pump prices

UK : DTI - Up to & Including Winter 1996 (Summer Mean - May,June,July : Winter Mean - Nov, Dec, Jan) : DTI - June 1997 onwards price from DTI Energy Policy & Analysis Unit

Table 3.6

73

fig (3.6)


Price Survey”, (3) Highland Council (16/03/11) PED Committee Report PED22/11, Appendix 1,

(4) Press & Journal (29/02/12) “Ups and Downs of Pump Prices”,



74


Price Survey” (3) Press & Journal (29/02/12) “Ups and Downs of Pump Prices”,

(4) http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx Monthly Table QEP 4.1.1 (5) Highland Council (16/03/11) PED Committee Report PED22/11, Appendix 1,


75


Price Survey” (3) Press & Journal (29/02/12) “Ups and Downs of Pump Prices”, (4) http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx Monthly Table QEP 4.1.1 (5) Highland Council (16/03/11) PED Committee Report PED22/11, Appendix 1,


76




77




78




79




80




81




82




83



JU

LY

19

95

AU

GU

ST

19

95

SE

PT

EM

BE

R 1

99

5

OC

TO

BE

R 1

99

5

NO

VE

MB

ER

19

95

DE

CE

MB

ER

19

95

JA

NU

AR

Y 1

99

6

FE

BR

UA

RY

19

96

MA

RC

H 1

99

6

AP

RIL

19

96

MA

Y 1

99

6

JU

NE

19

96

JU

LY

19

96

fig (3.15)

0

1

2

3

4

5

6

7

PR

ICE

DIF

FE

RE

NC

E (

pp

l)LEADED PETROL PRICES

SHETLAND PRICE > UK PRICE (PPL)

84



JULY 1995

AUGUST 1995

SEPTEMBER 1995

OCTOBER 1995

NOVEMBER 1995

DECEMBER 1995

JANUARY 1996

FEBRUARY 1996

JANUARY 2000

fig (3.16)

1

2

3

4

5

6

7

8

9

10

PR

ICE D

IFFER

EN

CE (

ppl)

LEADED PETROL PRICESORKNEY PRICE > UK PRICE (PPL)

85



JULY 1995 NOVEMBER 1995 JANUARY 1996 MARCH 1996 APRIL 1996 JUNE 1996

fig (3.17)

0

1

2

3

4

5

6

7

8

9

10

11

PR

ICE

DIF

FE

RE

NC

E (

pp

l)

LEADED PETROL PRICESW. ISLES PRICE > UK PRICE (PPL)

86

We should continue this section by looking at the worst case scenario. In Coll unleaded fuel

was recorded at £1.52 per litre as early as July 2008. The UK average at the same time was

119 pence per litre. The differential for unleaded was therefore 33 pence per litre, or 27.7%

above the UK average. Coll also had the highest price for diesel, 165 pence per litre in July

2008. The UK average at the same time was 133 pence per litre. The differential for diesel

was therefore 32 pence per litre, or 24.1% above the UK average.

The OFT view of the market, given in the 1998 Report, Section 11.11 (page 72) was:

"It appears that consumers are not paying over the odds for their petrol in North West

Scotland. The higher prices are a function of the extra costs of supply and the fact that there

is less intense competition there than in other areas. At present, there is no evidence of the

operation of cartels in the region"

The highest fuel prices in the world apparently do not constitute paying "over the odds."

When we last looked at the market in 1998, figures were produced by this author for HIAG

which look at the price differentials net of duty and VAT. These showed in rather more stark

terms why it was that price discrimination is practised in the area. Differences were found,

which have subsequently been widely reported, both in the national press and in the evidence

given to the Scottish Parliament by HIAG which showed that the differentials in prices net of

duty and VAT have been as high as 74% in the case of Lead Replacement Petrol (see Table

3.9), 88% in the case of unleaded petrol (see Table 3.12), and 91% in the case of Diesel (see

Table 3.15). We cannot conceive in light of this evidence how the OFT could have concluded

that Highlands and Islands motorists were "not paying over the odds" their assertion was

incredible and untenable. Over the last decade the differential appears to have fallen in

percentage terms. The supply chain now makes far more on every litre sold, not just those in

the Highlands and Islands. Commenting on a World in Action investigation into the activities

of Stagecoach, the then opposition Transport Minister, Brian Wilson remarked, "Competition

Law is just a joke...it is a paper tiger." It is sad to reflect, that little has changed since this

programme was made in 1995.

87

Lead Replacement Petrol - Net UK Price

Net Price Duty VAT Period Gross Price

10.90 19.38 5.30 Summer 1986 35.58

12.48 19.38 5.58 Winter 1986 37.44

12.91 19.38 5.65 Summer 1987 37.94

12.20 19.38 5.53 Winter 1987 37.11

11.80 20.44 5.64 Summer 1988 37.88

11.24 20.44 5.54 Winter 1988 37.22

15.59 20.44 6.31 Summer 1989 42.34

14.05 20.44 6.03 Winter 1989 40.52

14.63 22.48 6.50 Summer 1990 43.61

16.37 22.48 6.80 Winter 1990 45.65

16.94 25.85 7.49 Summer 1991 50.28

15.29 25.85 7.20 Winter 1991 48.34

15.93 27.79 7.65 Summer 1992 51.37

15.96 27.79 7.66 Winter 1992 51.41

16.38 30.58 8.22 Summer 1993 55.18

13.79 33.14 8.21 Winter 1993 55.14

15.33 33.14 8.48 Summer 1994 56.95

14.16 35.26 8.65 Winter 1994 58.07

15.29 36.14 9.00 Summer 1995 60.43

12.31 39.12 9.00 Winter 1995 60.43

11.77 39.12 8.91 Summer 1996 59.80

13.94 41.68 9.73 Winter 1996 65.35

10.55 45.10 9.74 Summer 1997 65.39

14.09 45.10 10.36 Winter 1997 69.55

12.33 49.26 10.78 Summer 1998 72.37

10.01 49.26 10.37 Winter 1998 69.64

13.72 52.88 11.66 Summer 1999 78.26

15.94 52.88 12.04 Winter 1999 80.86

File: Tab3_7f

Date: 17/09/00

Table 3.7

Source: Deirdre Taylor, DTI Energy Policy, Technology, Analysis & Coal 4d

88

Lead Replacement Petrol - Net Highlands Price


13.91 19.38 5.83 Summer 1986 39.12

13.54 19.38 5.76 Winter 1986 38.68

14.48 19.38 5.92 Summer 1987 39.78

14.48 19.38 5.92 Winter 1987 39.78

13.42 20.44 5.92 Summer 1988 39.78

14.16 20.44 6.06 Winter 1988 40.66

17.35 20.44 6.61 Summer 1989 44.40

15.85 20.44 6.35 Winter 1989 42.64

16.99 22.48 6.91 Summer 1990 46.38

17.18 22.48 6.94 Winter 1990 46.60

19.61 25.85 7.95 Summer 1991 53.41

19.32 25.85 7.90 Winter 1991 53.07

20.05 27.79 8.37 Summer 1992 56.21

19.82 27.79 8.33 Winter 1992 55.94

19.04 30.58 8.68 Summer 1993 58.30

15.92 33.14 8.59 Winter 1993 57.65

19.94 33.14 9.29 Summer 1994 62.37

19.00 35.26 9.49 Winter 1994 63.75

20.63 36.14 9.93 Summer 1995 66.70

16.62 39.12 9.76 Winter 1995 65.50

17.73 39.12 9.95 Summer 1996 66.80

19.85 41.68 10.77 Winter 1996 72.30

16.09 45.10 10.71 Summer 1997 71.90

20.01 45.10 11.39 Winter 1997 76.50

18.23 49.26 11.81 Summer 1998 79.30

17.46 49.26 11.68 Winter 1998 78.40

18.18 52.88 12.44 Summer 1999 83.50

21.33 52.88 12.99 Winter 1999 87.20

File: Tab3_7f

Date: 17/09/00

Table 3.8

Source: (1) Mackay Consultants (Various Dates) Rural Scotland Price Survey (2) Highland Council (16/03/11) PED Committee Report PED22/11, Appendix 1,

(3) Press & Journal (29/02/12) “Ups and Downs of Pump Prices”

89

UK v Highlands & Islands Lead Replacement Petrol Price Net of Duty & VAT

UK Highlands Price Difference Price Difference

Net Fuel Price Net Fuel Price (ppl) (Percent)

Summer 1986 10.90 13.91 3.01 28%

Winter 1986 12.48 13.54 1.06 8%

Summer 1987 12.91 14.48 1.57 12%

Winter 1987 12.20 14.48 2.28 19%

Summer 1988 11.80 13.42 1.62 14%

Winter 1988 11.24 14.16 2.92 26%

Summer 1989 15.59 17.35 1.76 11%

Winter 1989 14.05 15.85 1.80 13%

Summer 1990 14.63 16.99 2.36 16%

Winter 1990 16.37 17.18 0.81 5%

Summer 1991 16.94 19.61 2.67 16%

Winter 1991 15.29 19.32 4.03 26%

Summer 1992 15.93 20.05 4.12 26%

Winter 1992 15.96 19.82 3.86 24%

Summer 1993 16.38 19.04 2.66 16%

Winter 1993 13.79 15.92 2.13 15%

Summer 1994 15.33 19.94 4.61 30%

Winter 1994 14.16 19.00 4.84 34%

Summer 1995 15.29 20.63 5.34 35%

Winter 1995 12.31 16.62 4.31 35%

Summer 1996 11.77 17.73 5.96 51%

Winter 1996 13.94 19.85 5.91 42%

Summer 1997 10.55 16.09 5.54 53%

Winter 1997 14.09 20.01 5.92 42%

Summer 1998 12.33 18.23 5.90 48%

Winter 1998 10.01 17.46 7.45 74%

Summer 1999 13.72 18.18 4.46 33%

Winter 1999 15.94 21.33 5.39 34%

File: Tab3_9f

Date: 17/09/00

Table 3.9

Sources: DTI (op cit) and Mackay Consultants (op cit)

90

Sum

mer

1986

Win

ter

1986

Sum

mer

1987

Win

ter

1987

Sum

mer

1988

Win

ter

1988

Sum

mer

1989

Win

ter

1989

Sum

mer

1990

Win

ter

1990

Sum

mer

1991

Win

ter

1991

Sum

mer

1992

Win

ter

1992

Sum

mer

1993

Win

ter

1993

Sum

mer

1994

Win

ter

1994

Sum

mer

1995

Win

ter

1995

Sum

mer

1996

Win

ter

1996

Sum

mer

1997

Win

ter

1997

Sum

mer

1998

Win

ter

1998

Sum

mer

1999

Win

ter

1999

file: Tab3_9f

0

5

10

15

20

25

Petr

ol Price N

et of

VA

T a

nd D

uty

Net Highland PriceNet UK Price

fig 3.18

UK and Highland Lead Replacement PetrolNet Retail Proceeds

92

Unleaded Petrol - Net UK Price


14.57 17.72 5.65 Winter 1989 37.94

15.16 19.49 6.06 Summer 1990 40.71

16.82 19.49 6.35 Winter 1990 42.66

17.38 22.41 6.96 Summer 1991 46.75

15.73 22.41 6.68 Winter 1991 44.82

16.55 23.42 6.99 Summer 1992 46.96

16.78 23.42 7.04 Winter 1992 47.24

17.06 25.76 7.49 Summer 1993 50.31

14.51 28.32 7.50 Winter 1993 50.33

15.54 28.32 7.67 Summer 1994 51.53

14.33 30.44 7.83 Winter 1994 52.60

15.99 30.44 8.13 Summer 1995 54.56

12.11 34.30 8.12 Winter 1995 54.53

12.26 34.30 8.15 Summer 1996 54.71

14.65 36.86 9.02 Winter 1996 60.53

10.66 40.28 8.92 Summer 1997 59.86

14.09 40.28 9.52 Winter 1997 63.89

12.22 43.98 9.84 Summer 1998 66.04

9.55 43.98 9.37 Winter 1998 62.90

13.20 47.21 10.57 Summer 1999 70.98

16.96 47.21 11.23 Winter 1999 75.40

52.64 57.95 22.12 Summer 2011 132.71

54.47 57.95 22.48 February 2012 134.90

File: Tab3_10f

Date: 17/09/00

Table 3.10

Source: (1) Deirdre Taylor, DTI Energy Policy, Technology, Analysis & Coal 4d (up to Winter 1999)



93

Unleaded Petrol - Net Highlands Price


- - - - -

16.14 17.72 5.92 Winter 1989 39.78

17.55 19.49 6.48 Summer 1990 43.52

17.92 19.49 6.55 Winter 1990 43.96

20.05 22.41 7.43 Summer 1991 49.89

19.75 22.41 7.38 Winter 1991 49.54

20.44 23.42 7.68 Summer 1992 51.54

20.20 23.42 7.63 Winter 1992 51.25

19.60 25.76 7.94 Summer 1993 53.30

16.26 28.32 7.80 Winter 1993 52.38

19.48 28.32 8.37 Summer 1994 56.17

19.39 30.44 8.72 Winter 1994 58.55

21.05 30.44 9.01 Summer 1995 60.50

16.93 34.30 8.97 Winter 1995 60.20

18.21 34.30 9.19 Summer 1996 61.70

20.50 36.86 10.04 Winter 1996 67.40

17.08 40.28 10.04 Summer 1997 67.40

20.57 40.28 10.65 Winter 1997 71.50

18.23 43.98 10.89 Summer 1998 73.10

17.98 43.98 10.84 Winter 1998 72.80

18.41 47.21 11.48 Summer 1999 77.10

22.58 47.21 12.21 Winter 1999 82.00

60.71 57.95 23.73 Summer 2011 142.39

60.22 57.95 23.63 February 2012 141.80

File: Tab3_10f

Date: 17/09/00

Table 3.11

Source: (1) Mackay Consultants (Various Dates) Rural Scotland Price Survey (2) Press & Journal (29/02/12) “Ups and Downs of Pump Prices”, (3) http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx Monthly Table QEP 4.1.1 (4) Highland Council (16/03/11) PED Committee Report PED22/11, Appendix 1,


94

UK versus Highlands Unleaded Price Net of Duty & VAT


Period Net Price Net Price (ppl) (Percent)

Winter 1989 14.57 16.14 1.57 11%

Summer 1990 15.16 17.55 2.39 16%

Winter 1990 16.82 17.92 1.10 7%

Summer 1991 17.38 20.05 2.67 15%

Winter 1991 15.73 19.75 4.02 26%

Summer 1992 16.55 20.44 3.89 24%

Winter 1992 16.78 20.20 3.42 20%

Summer 1993 17.06 19.60 2.54 15%

Winter 1993 14.51 16.26 1.75 12%

Summer 1994 15.54 19.48 3.94 25%

Winter 1994 14.33 19.39 5.06 35%

Summer 1995 15.99 21.05 5.06 32%

Winter 1995 12.11 16.93 4.82 40%

Summer 1996 12.26 18.21 5.95 49%

Winter 1996 14.65 20.50 5.85 40%

Summer 1997 10.66 17.08 6.42 60%

Winter 1997 14.09 20.57 6.48 46%

Summer 1998 12.22 18.23 6.01 49%

Winter 1998 9.55 17.98 8.43 88%

Summer 1999 13.20 18.41 5.21 39%

Winter 1999 16.96 22.58 5.62 33%

Summer 2011 52.64 60.71 8.07 15%

February 2012 54.47 60.22 5.75 11%

File: Tab3_12f

Date: 17/09/00

Table 3.12


Price Survey” (3) Press & Journal (29/02/12) “Ups and Downs of Pump Prices”, (4) http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx Monthly Table QEP 4.1.1

(5) Highland Council (16/03/11) PED Committee Report PED22/11, Appendix 1,


96

Diesel - Net UK Price


15.75 36.86 9.21 Winter 1996 61.82

11.29 40.28 9.03 Summer 1997 60.60

14.24 40.28 9.54 Winter 1997 64.06

12.98 43.99 9.97 Summer 1998 66.94

10.44 43.99 9.53 Winter 1998 63.96

12.61 50.21 10.99 Summer 1999 73.81

15.99 50.21 11.58 Winter 1999 77.78

56.89 57.95 22.97 Summer 2011 137.81

61.08 57.95 23.80 February 2012 142.83

File: Tab3_13f

Date: 17/09/00

Table 3.13

Source: Deirdre Taylor, DTI Energy Policy, Technology, Analysis & Coal 4d Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland



97

Diesel - Net Highlands Price


23.14 36.86 10.50 Winter 1996 70.50

21.51 40.28 10.81 Summer 1997 72.60

22.27 40.28 10.95 Winter 1997 73.50

19.41 43.99 11.10 Summer 1998 74.50

16.95 43.99 10.66 Winter 1998 71.60

20.26 50.21 12.33 Summer 1999 82.80

21.70 50.21 12.59 Winter 1999 84.50

65.33 57.95 24.66 Summer 2011 147.94

66.58 57.95 24.90 February 2012 149.43

File: Tab3_13f

Date: 17/09/00

Table 3.14

Source: Mackay Consultants (Various Dates) Rural Scotland Price Survey Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland



98

UK versus Highlands Diesel Price Net of Duty & VAT


Period Net Price Net Price (ppl) (Percent)

Winter 1996 15.75 23.14 7.39 47%

Summer 1997 11.29 21.51 10.22 91%

Winter 1997 14.24 22.27 8.03 56%

Summer 1998 12.98 19.41 6.43 50%

Winter 1998 10.44 16.95 6.51 62%

Summer 1999 12.61 20.26 7.65 61%

Winter 1999 15.99 21.70 5.71 36%

Summer 2011 56.89 65.33 8.44 15%

February 2012 61.08 66.58 5.50 9%

File: Tab3_15f

Date: 17/09/00

Table 3.15

Sources: DTI (op cit) and Mackay Consultants (op cit) Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland



100

The above figures did not attempt to isolate the ex-refinery fuel cost included in the supply

chain's earnings. Removing this element would have the effect of lifting the final barrier to a

true understanding of the dichotomy in prices between urban and rural areas. That is what we

must do now. Let's look again at the worst differentials recorded net of duty and VAT. Table

3.18 shows the effect of removing the cost of fuel ex-refinery from our calculations. It shows

that it is possible for the wholesale and retail elements of the supply chain to earn between

two and two and a half times as much from the sale of one litre of motor fuel in the

Highlands and Islands market as they can earn in the rest of the UK. In our opinion, the

conclusion that Highlands and Islands consumers are "not paying over the odds" is

ridiculous.

Table 3.16 gives the cost to the Highlands and Islands of the higher fuel prices being charged.

It shows that in the last year (2011), when compared with UK prices, the differential was £35

million pounds. This finding is in agreement with a 1998 EKOS study, which compared

Highlands and Islands prices with Scottish average prices. Over a decade the figure would be

approximately £350 million pounds from higher prices in less than 1% of the UK motor fuel

market.

Over the last twelve years the network has been controlled by S & JD Robertson, BP,

Scottish Fuels and GB Oils. Each sale results in Capital Gains for the vendor and a lower rate

of Return on Assets and Return on Capital Employed as the acquisition cost is now part of

product cost. Much higher prices can be charged to end customers without attracting attention

from the regulator. With no alternative supply chain offering competition price differentials

are entrenched. Establishing such a network will be necessary to bring down prices as was

achieved by Highland Council Harbours in the market for Marine Gasoil. The market for

home heating oil (kerosene) is like petrol & diesel an unregulated private monopoly.

101

COST OF HIGHER PETROL PRICES TO HIGHLAND CONSUMERS

YEAR ROAD FUEL

CONSUMED IN THE HIGHLANDS

(LITRES)

HIGHLANDS AS A % OF UK MARKET

ROAD FUEL CONSUMED IN THE

UK (LITRES)

TOTAL PETROL CONSUMED IN THE

UK (LITRES)

TOTAL DIESEL CONSUMED IN THE

UK (LITRES)

1986 369,667,976 0.0093 39,749,244,780 29,091,432,660 10,657,812,120 1987 386,269,104 0.0093 41,534,312,295 30,059,114,040 11,475,198,255 1988 411,048,568 0.0093 44,198,770,745 31,502,641,610 12,696,129,135 1989 428,973,912 0.0093 46,126,227,080 32,416,421,090 13,709,805,990 1990 440,605,411 0.0093 47,376,925,955 32,943,249,155 14,433,676,800 1991 437,459,207 0.0093 47,038,624,460 32,548,232,780 14,490,391,680 1992 443,261,871 0.0093 47,662,566,730 32,579,096,970 15,083,469,760 1993 448,260,886 0.0093 48,200,095,230 32,202,955,745 15,997,139,485 1994 450,594,721 0.0093 48,451,045,295 30,952,222,995 17,498,822,300 1995 445,484,624 0.0093 47,901,572,470 29,728,071,280 18,173,501,190 1996 461,167,581 0.0093 49,587,911,975 30,103,022,815 19,484,889,160 1997 469,130,242 0.0093 50,444,112,085 30,151,625,310 20,292,486,775 1998 466,147,191 0.0093 50,123,353,898 29,604,526,568 20,518,827,330 1999 464,671,871 0.0093 49,964,717,273 30,141,824,718 19,822,892,555 2011 435,616,543 0.00968 45,019,102,787 19,379,168,766 25,639,934,021

25,106,213,496

Sources: Column 3: see pages 44-45 above. Columns 4,5&6 : Adapted from Petroleum Review, Retail Marketing Survey 1996, 1997, 1998, 1999, 2000 and 2012

YEAR TOTAL FUEL CONSUMED IN

THE HIGHLANDS (LITRES)

PRICE DIFFERENCE : HIGHLANDS Vs

UK (ppl)

EXTRA COST OF HIGHLAND

MOTORING (£'S)

1986 369,667,976 2.390 £8,835,065 1987 386,269,104 2.255 £8,710,368 1988 411,048,568 2.670 £10,974,997 1989 428,973,912 2.090 £8,965,555 1990 440,605,411 1.923 £8,472,842 1991 437,459,207 3.930 £17,192,147 1992 443,261,871 4.515 £20,013,273 1993 448,260,886 2.669 £11,964,083 1994 450,594,721 5.410 £24,377,174 1995 445,484,624 5.753 £25,628,730 1996 461,167,581 6.945 £32,028,089 1997 469,130,242 8.681 £40,725,196 1998 466,147,191 8.039 £37,473,573 1999 464,671,871 6.902 £32,071,653 2011 435,616,543 8.218 £35,798,968

Sources: Column 3: see Table 3.17 (following) Table 3.16

102

Weighted Average Price Difference (ppl) UK versus Highlands & Islands

Year Price difference Four Star

Price difference Unleaded

Price difference

Diesel

Total price difference

Volume Four Star (Tonnes)

Volume Unleaded (Tonnes)

Volume Diesel

(Tonnes)

Total Volume

(Tonnes)

1986 2.390 2.390 19,156,313 19,156,313

1987 2.255 2.255 20,101,674 20,101,674

1988 2.670 2.670 21,146,649 21,146,649

1989 2.090 2.090 18,907,111 18,907,111

1990 1.860 2.060 1.923 16,057,216 7,330,108 23,387,324

1991 3.930 3.930 3.930 14,152,826 8,696,072 22,848,898

1992 4.685 4.295 4.515 12,775,179 9,846,014 22,621,193

1993 2.815 2.520 2.669 11,262,604 11,039,688 22,302,292

1994 5.550 5.295 5.410 9,681,119 11,812,658 21,493,777

1995 5.670 5.805 5.753 8,158,625 12,839,007 20,997,632

1996 6.975 6.930 6.945 7,193,236 14,313,698 21,506,934

1997 6.730 7.575 10.720 8.698 6,250,232 16,001,890 14,976,005 37,228,127

1998 7.845 8.480 7.600 8.039 4,685,970 17,162,389 15,143,046 36,991,405

1999 5.790 6.360 7.855 6.902 3,323,404 18,921,485 14,629,441 36,874,330

2011 8.440 8.070 8.218 14,259,874 21,348,821 35,608,695

File: Tab3_17f

Date: 17/09/00

Table 3.17

103

UK UK Highlands Highlands Price Difference Highland Price

Net Fuel Price Net Fuel Price Net Fuel Price Net Fuel Price Ex. NWE CIF

Price as a percentage

Inc NWE CIF

Price Ex. NWE CIF

Price Inc. NWE CIF

Price Ex. NWE CIF

Price (ppl) of UK price

(ppl) (ppl) (ppl) (ppl)

15/02/12 Unleaded Petrol Price 54.47 3.99 60.22 9.74 5.75 244%

15/02/12 Diesel Price 61.07 5.63 66.57 11.13 5.50 198%

Spot $ Exch Rate Spot £ L/Tonne Ppl

NWE CIF Diesel $1023.25 1.5694 £652.00 1,176 55.44ppl

NWE CIF Petrol $1,056.00 1.5694 £672.87 1,333 50.48ppl

File: Tab3_18f

Date: 17/09/00 Table 3.18

104

Conclusions

In this Chapter we have seen that:

* Population density in the region is amongst the lowest in Europe.

* Car dependency is and will remain high.

* Public transport links are poor and often non-existent.

* The region has a higher number of vehicles per capita than Scotland & the UK

* Motor Fuel demand is 0.968 of one percent of the UK market.

* Supply to independent sites is a highly concentrated private monopoly

* The number of sites in the Highland Council area has collapsed from 348 in 1975 to only

97 in 2011.

* Scottish Government assistance with tank replacement has been removed.

* Much more assistance will be required to prevent the site network shrinking further.

* Solus Ties do not deliver cheap motor fuel in rural areas.

* Rate relief for garage shops could help sustain filling stations.

* Price differentials rose to record levels following the OFT Report in 1998.

* Retail prices on islands are up to 33% higher than UK prices in recent years.

* Refiner, wholesaler and retailer margins have been up to 91% higher than the UK.

* Wholesaler and retailer margins are up to two-and-a-half times higher than the UK.

* The OFT conclusion that consumers are "not paying over the odds" is unsustainable.

* The differential with UK prices in 2011 was over £35 million pounds.

* The differential in the last decade can be estimated at more than £350 million pounds.

105

Appendices

1) Map of Filling Station Closures since 1993

2) List of Filling Station Closures up to early 1993

3) List of Filling Station Closures since early 1993

4) Map of Filling Stations Remaining Open – May 2013

5) List of Filling Stations Remaining Open – May 2013

111

Premises Closed Since 1993 Address 1 Address 2 Address 3 Address 4 Address 5 Last Licenced

Aultbea Hotel Aultbea Nr Achnasheen Ross-shire IV22 2HX 1993

McConcheys Millbank Road Thurso Caithness KW14 8PS 1993

Kishorn Filling Station Kishorn Filling Station Kishorn Strathcarron 1993

D & H Ferguson Camusterrach Applecross 1993

Inverewe Service Station Inverewe Service Station Inverewe Poolewe Wester Ross 1994

MESSRS HICKS Castlehill Dunbeath Caithness KW6 6EY 1994

A & N Smith Chapel Road Grantown on Spey Inverness-shire 1994

A L Grant Woodside Service Station Grantown on Spey Inverness-shire 1994

Kinlochlaggan Filling Station Kinlochlaggan Laggan Newtonmore 1994

Motorway Tyres and Access. Ltd Miller Street Wick Caithness 1994

Royal Garage Royal Garage King Street Nairn 1995

Castlevue Filling Station Mey Caithness KW14 8XH 1995

Mr J L Cameron Cameron's Garage Onich FORT WILLIAM PH33 6RY 1995

Brian MacGregor & Son Haugh Garage 33 Haugh Rd Inverness IV2 4SD 1995

R G & S Wicks Hastigrow Filling Station Bower By Wick Caithness 1995

Mr I Chisolm Ballachulish Filling Station Albert Road Ballachulish PA39 4JR 1996

McConechy's Tyre Service Ltd Craig Road Dingwall IV15 9LE 1996

Burnside Garage Long Road Avoch Ross-shire IV9 8AJ 1996

M Smith The Garage Marybank Muir of Ord Ross-shire IV6 1996

R W Stapley Nethybridge Service Station Nethybridge Inverness-shire 1996

K A MacKenzie Minch View Port Henderson Gairloch IV21 2AS 1996

C Sutherland & Son The Garage Reay Thurso Caithness KW14 7RE 1996

Mr Peter Foster Riverford Service Station Ord Road Conon Bridge IV6 7XL 1997

Lochluichart Estate North The Aultguish Inn Aultguish Garve Ross-Shire IV23 2PQ 1997

Burnside Garage Long Road Avoch Ross-shire IV9 8AJ 1997

K A MacKenzie Minch View Port Henderson Gairloch IV21 2AS 1997

Lybster Portland Arms Filling Station Quatre Braes Lyster Caithness KW3 6BW 1997

John Bain and Sons The Garage North Erradale Gairloch Ross-shire IV21 2DS 1997

112

Ord Filling Sation Great North Road Muir of Ord Ross-shire IV6 7UA 1997

Sutherland Transport and Trading Main Street Lairg Sutherland 1997

Loch Shiel Hotel Loch Shiel Hotel Acharacle Argyll PH36 4JL 1998

Mr Philip Cameron Viewfield Filling Station Newtonmore Road Kingussie 1998

Norman Cordiner Ltd 33 Harbour Road Longman Inverness IV1 1UG 1998

Mr & Mrs I Bartlett Spa Service Station Strathpeffer IV14 9BX 1998

Mace The Stores Main Road Hill of Fearn Ross-shire IV20 1TG 1998

Mr Philip Cameron Viewfield Filling Station Newtonmore Road Kingussie 1998

Richard's Garage Ltd (*OLD SITE*) Francis Street Wick Caithness 1999

Mr William D A Swanson Northern Motors Couper Square Thurso Caithness KW14 8AS 1999

MacRae & Dick Seaforth Filling Station Station Road Dingwall Ross-Shire IV15 9JE 1999

Mr Keith Pickard White Heather Garage Mill Street Ullapool Ross-shire IV26 2UN 1999

Sutherland Transport & Trading South Bonar Filling Station Bonar Bridge Sutherland IV24 3AN 1999

Mr & Mrs T M Sutherland Sutherland Arms Garage Old Bank Road Golspie Sutherland KW10 6SR 1999

BP Oil Ltd Cromwell Tower Filling Station Chapel Street Inverness IV1 1NA 1999

Mr & Mrs I Bartlett Spa Service Station Strathpeffer IV14 9BX 1999

Dulnain Bridge Filling Station Dulnain Bridge Morayshire 1999

Crossroads Filling Station 17 Arabella Tain Ross-shire IV19 1QH 1999

Caberfeidh Guest House Caberfeidh Guest House Caberfeidh Smoo, Durness Sutherland IV27 4QA 2000

Spar Shop Main Street North Kessock Ross-shire IV1 1XW 2000

Mr Archie Campbell Cuillin View Caravan Site Breakish Isle of Skye IV42 8PY 2000

Mace The Stores Main Road Hill of Fearn Ross-shire IV20 1TG 2000

A L Grant Woodside Grantown on Spey 2001

Mrs Jean Macrae Tomatin Filling Station Tomatin Inverness IV13 7YP 2001

Alistair MacGregor Spean Bridge Filling Station Spean Bridge Fort William 2001

Hugh C Johnston Dornoch Filling Station The Square Dornoch Sutherland IV25 3SD 2001

Inverarnie Stores Inverernie Filling Station Inverarnie Stores Inverarnie Farr IV1 2XA 2001

Forsinard Hotel Forsinard Hotel Forsinard Sutherland KW13 6YT 2002

Mathers Shop The Shop Sangomore Durness, By Lairg Sutherland IV27 4PZ 2002

113

Tarvie Services Tarvie Services Tarvie Strathpeffer Ross-shire IV14 9EJ 2002

Mr Allan Michael Peat. Bridgend Stores Aultbea Ross-shire IV22 2JA 2002

Ramko Raigmore Service Station Millburn Road Inverness IV2 3TR 2002

Spar Shop Main Street North Kessock Ross-shire IV1 1XW 2002

Kylesku Hotel Kylesku Hotel Kylesku Lairg IV27 4HW 2003

W Mowatt Mowatt's Garage George Street Wick Caithness KW1 4DG 2003

Highland Fling Scotland Ltd Balmacara Filling Station Balmacara Kyle of Lochalsh IV40 8DH 2003

Friars Bridge Filling Station Friars Bridge Filling Station 16 Telford Street Inverness IV3 5JZ 2003

Achness Hotel Rosehall By Lairg IV27 4BD 2003

Inchnadamph Hotel Inchnadamph Hotel Assynt Lairg IV27 4HN 2003

Henderson Group Midmills Garage 56 Midmills Road Inverness IV2 3PA 2004

Aird Motors Ltd (Petrol site closed) High Street Beauly Inverness-shire IV4 7BP 2004

Millerton Filling Stations Co 16 Glenurquhart Road Inverness IV3 6JL 2004

Gleaner Oils Ltd. Park Street Dingwall Ross-Shire IV15 9JG 2004

Mr Alan M MacLeod Moss Filling Station Moss Road Ullapool Ross-shire IV26 2TG 2004

J & E Madden Spinningdale Stores Ardgay Sutherland IV24 3AD 2004

Station Garage Station Road Golspie Sutherland KW10 6SR 2004

Achness Hotel Rosehall By Lairg IV27 4BD 2004

Nicolson Bus Company Ltd Borve Filling Station Borve Portree Isle of Skye IV51 9PE 2005

Ian MacPhail Conon Service Station Main Road Conon Bridge Ross-shire IV7 8HA 2005

MacRae & Dick Cairngorm Service Station Main Road Aviemore PH22 1PT 2005

Somerfield Petrol Station King Street Nairn IV12 4DN 2005

Dun-Alscaig Est.Management Ltd Ardgay Services Ardgay, Sutherland IV24 3DJ 2005

Mr Stephen J Plowman Achnasheen Filling Station Achnasheen Ross-shire IV22 2EE 2005

Highland Fling Scotland Ltd Balmacara Filling Station Balmacara by Kyle of Lochalsh IV40 8DH 2005

Highland Trading Post Fort William Road Kinlochleven PH50 4QL 2006

Mr J P Martin Lochewe Service Station Poolewe Ross-shire IV22 2JU 2006

Rhiconich Hotel Rhiconich By Lairg Sutherland IV27 4RN 2006

Friars Bridge Filling Station Friars Bridge Filling Station 16 Telford Street Inverness IV3 5JZ 2006

114

Dun-Alscaig Est.Management Ltd Ardgay Services Ardgay, Sutherland IV24 3DJ 2006

The Torridon Torridon By Achnasheen Ross-shire IV22 2EY 2007

Mr M D Cox Alness Service Station Obsdale Road Alness Ross-Shire IV17 0TU 2007

Mr J P Martin Lochewe Service Station Poolewe Ross-shire IV22 2JU 2007

Mrs Ann Gunn Elm Tree Filling Station George Street Wick Caithness KW1 4DG 2008

Mr & Mrs M B Quin Edinbane Shop Edinbane Isle of Skye IV51 9PL 2008

Esso Highlander Service Station Highlander Service Station Millburn Road Inverness IV2 3TR 2008

Corpach Hotel Corpach Fort William PH33 7JJ 2008

Fearn Service Station Fearn Service Station Main Road Hill-of Fearn Ross-shire IV20 1TE 2008

The Altnaharra (Sporting Hotel) Ltd By Lairg Sutherland IV27 4UE 2009

Motorway Cars Petrol FS Camanachd Crescent Fort William Inverness-shire PH33 6XZ 2009

Lochshell Filling Station Lochshell Filling Station by Wick Caithness KW1 4TB 2010

Esso Highlander Service Station Highlander Service Station Millburn Road Inverness IV2 3TR 2010

Alistair MacGregor Spean Bridge Filling Station Spean Bridge by Fort William 2010

Source: Highland Council (2013) Planning & Economic Development

116

Name of Premises Still Open May 2013 Address 1 Address 2 Address 3 Address 4 Address 5

William Dunnet & Co Ltd Petrol Filling Station Mansons Lane Thurso Caithness KW14 8EP

Ian & Lynn Stewart The Shop Reay Caithness KW14 7RG

Mrs C Matheson Old Post Office House Auckengill By Wick KW1 4XP

Pennyland Service Station Pennyland Service Station Scrabster Road Thurso Caithness KW14 7JU

J & G Sutherland and Spraytech The Garage Crescent Street Halkirk KW12 6XN

William Dunnet & Co Ltd Francis Street Wick KW1 5PZ

MacKays Garage Ltd Main Street Castletown Caithness KW14 8TU

Alan & Elizabeth Bamber Bridgend Filling Station Bridgend Thurso Caithness KW14 8PP

Post Office John O'Groats Caithness KW1 4YR

Allan's of Gillock Central Garage Watten Caithness KW1 5XG

Richard Mackay & Sons (Durness) Ltd Durine Durness By Lairg Sutherland IV27 4PN

Mr P & Mrs S Malone Bettyhill General Merchants Bettyhill Thurso KW14 7SP

G A & D E Skene Peter Burr Stores Tongue by Lairg IV27 4XF

Inverinate Service Station Inverinate Service Station Inverinate By Kyle of Lochalsh Ross-shire IV40 8HB

The Stop Shop Carbost Isle of skye IV47 8SR

Ewen MacRae (West End Garage) Ltd Dunvegan Road Portree IV51 9HD

Johnston Bros Petrol Station Mallaig Industrial Estate The Pier Mallaig Inverness-Shire PH41 4PX

The Co-operative Group Ltd Petrol Station Broadford Isle of Skye IV49 9AB

Road to the Isles Filling Station Lochybridge Fort William Inverness-shire PH33 6TQ

Onich Services Onich Fort William PH33 6RZ

MacKenzie Stores Lynton Staffin Isle of Skye IV51 9JS

Morar Motors Ltd The Garage Morar Inverness-shire PH40 4PA

Ben Service Station North Road Fort William PH33 6TQ

Gleaner Oils Filling Station North Road Fort William PH33 6FS

Portree Filling Station Viewfield Road Portree IV51 9EU

Glengarry Filling Station Invergarry Inverness-shire PH35 4HL

Sleat Community Trust Petrol Station Armadale Ardvaser, Isle of Skye IV45 8RS

Uig Filling Station/Cafe Uig Isle of Skye IV51 9 X X

Mr John MacPhie Atholl Service Station Dunvegan Isle of Skye IV55 8WA

117

Ardgour Stores Clovullin Ardgour by Fort William PH33 7AB

The Village Store Strontian Acharacle Argyll PH36 4HZ

Mr Johnathan Ball Ferry Stores Kilchoan Acharacle, Argyll PH36 4LH

Claymore Ltd Claymore Filling Station Tyndrum Road Glencoe PH49 4HP

Cluanie Inn Cluanie Inn Cluanie Glenmoriston Inverness IV63 7YW

Shiel Bridge Filling Station Shiel Shop Limited Shiel Bridge Glenshiel Kyle of Lochalsh IV40 8HW

Chictrade Ltd Central Filling Station Main Road Kyle of Lochalsh IV40 8AG

Wm Morrison Supermarkets PLC Petrol Filling Station An Aird Fort William Inverness-Shire PH33 6AN

Lochaline Stores & Filling Station Morvern Lochaline Oban, Argyll PA34 5XT

T P McHardy Ltd Blackpark Filling Station Clachnaharry Road Inverness IV3 8QH

Kingswell Filling Station 36 Old Perth Road Culcabock Inverness IV2 3RH

Bannerman Co. Ltd (SEAT) 44 Harbour Road Inverness IV1 1UF

J A Menzies & Sons Ltd Lewiston Garage Lewiston Drumnadrochit Inverness-shire IV63 6UL

Mr George Wilson Girvan Glen Service Station Fort Augustus Inverness-shire PH32 4DD

Mr Ron M MacDonald Old Bridge Garage Carrbridge Inverness-shire PH23 3AU

Malthurst Newtonmore Service Station Perth Road Newtonmore PH20 1AP

Dalwhinnie Filling Station Dalwhinnie Inverness-Shire PH19 1AF

Mr George Stables Cruickshank West End Garage Milton Drumnadrochit IV3 6TZ

Mr Duncan Fraser Bridgend Filling Station Station Road Beauly IV4 7EH

Malthurst Grantown Service Station 39 Spey Avenue Grantown-On-Spey Moray-shire PH26 3EJ

P J Grant & Sons Forres Road Nairn IV12 5QD

Tesco Petrol Station Tesco Supermarket Milton of Inshes Perth Road Inverness IV2 3TW

Food Connect 22/24 Longman Road Longman Industrial Estate Inverness IV1 1RY

Co-operative Group Ltd Petrol Station Inverness Road Nairn IV12 4SG

Malthurst Aviemore 62 Grampian Road Aviemore Inverness-shire PH221PD

Kessock Service Station Longman Road Inverness Highland IV1 1SD

Tesco Petrol Station Business & Retail Park Nairn Road West Seafield Inverness IV1 2PA

Morrisons Petrol Station Millburn Road Inverness IV2 6NX

Mrs Theresa Ross The Stores Achiltibuie Ullapool IV26 2YG

118

Bannerman Co Ltd Tore Service Station Tore Ross-shire IV6 7RZ

West End Filling Station Strathpeffer Road Dingwall Ross-shire IV15 9QE

Mr Duncan Ross Lochcarron Garage Main Street Lochcarron Strathcarron IV54 8YS

Kinlochewe Service Station Ltd Kinlochewe Service Station Kinlochewe Ross-shire IV22 2PA

Ord Filling Station Great North Road Muir of Ord Ross-shire IV6 7XR

Laide Post Office Laide Achnasheen Ross-shire IV22 2NB

A C & I C Fraser & Son Ltd Lochbroom Filling Station Garve Road Ullapool Ross-Shire IV26 2SX

Mr Hugh Scott Garage Jemimaville Dingwall IV7 8LU

Mr C Fraser The Garage Munlochy Ross-shire IV8 8NE

Gairloch Filling Station Gairloch Ross-shire IV21 2BH

A C & I C Fraser & Son Ltd Contin Filling Station Contin Ross-shire IV14 9ES

J A Wilkinson Lochcarron Filling Station Main Street Lochcarron Ross-shire IV54 8YB

Applecross Community Trading Co Ltd Applecross Filling Station Shore Street Applecross Wester Ross IV54 8LR

Tesco Petrol Station Tesco Stores Ltd Mart Road Dingwall Ross-shire IV15 9PP

Tesco Petrol Station Wick Airport Wick Airport Road Wick Airport Industrial Estate Wick KW1 4QS

Tesco Petrol Filling Station Shore Road Tain Ross-shire IV19 1EH

Sainsbury's Petrol Filling Station Forres Road Nairn IV12 5SR

Tesco Petrol Station Tesco Supermarket Dores Road Inverness IV2 4QX

Asda Petrol Station Slackbuie Amenity Land 2 Slackbuie Inverness Highland

ASDA Petrol Station Knockbreck Road Tain IV19 1NX

Assynt Trading Co Ltd Lochinver Filling Station Lochinver Stores Lochinver Sutherland IV27 4LF

Mr T M Sutherland Sutherland Arms Garage Ltd Victoria Road Brora Sutherland KW9 6QN

A R Mackenzie Victoria Garage Victoria Road Brora Sutherland KW9 6LN

T & M Sutherland Evelix Service Station Evelix Dornoch Sutherland IV25 3NG

Bervie Stores Ltd The Filling Station Kinlochbervie Lairg Sutherland IV27 4RP

Mrs Vanessa F D Crowsley Scourie Filling Station Main Road Scourie Sutherland IV27 4SX

Skymount Limited Bridgend Stores Ord Place Lairg Sutherland IV27 4AZ

Mr A Nicolson Pittentrail Garage Pittentrail Rogart Sutherland IV28 3TU

Bannerman Company Ltd Invergordon Service Station 130 High Street Invergordon Ross-shire IV18 OAN

119

Bannerman Company Ltd Ken's Garage Kildary Invergordon IV18 0NX

Gleaner Oils Ltd Skiach Service Station 4D Evanton Ind Est Evanton Ross-shire IV16 9XJ

Gleaner Oils Morangie Filling Station Morangie Road Tain Ross-shire IV19 1HP

Wm Morrison Supermarkets PLC Safeway Supermarket B817 High Street - A9 Overbrid Alness IV17 0UY

Source: Highland Council (2013) Planning & Economic Development

120

4) Explaining the Urban / Rural Price Dichotomy

This Chapter explains the Urban / Rural Price Dichotomy. It will look at:

* Explaining the price dichotomy

* Analysing the structure of the Urban Market

* Analysing the structure of the Rural Market

* Identifying the recipients of abnormal profits

* Summarising the findings of this section

Explaining the Price Dichotomy

There are a variety of possible reasons which might individually or collectively explain the

dichotomy which exists in the UK petrol market between prices in urban and rural areas.

These include:

* Higher Costs of Delivery

* Higher Costs of Filling Station operation

* Lower Filling Station Throughput in Rural Areas

* Barriers to Entry into the Rural petrol market

* Price Discrimination between Urban and Rural Areas

* Predatory Pricing in Urban Markets

* The operation of a Cartel-like structure in Rural Areas

* The existence of Localised Monopolies in Rural Markets

Higher Cost of Delivery

The first issue we are concerned with in this section is the higher cost of delivery in rural and

island areas. Retailers were faced with two costs identified in the 1990 MMC report. The

121

first of these was the Special Zone wholesale price premium which was 0.16 ppl for Shell

deliveries and 0.12 ppl for BP and Esso deliveries when the MMC conducted their

investigation in 1988. The second factor was the small load premium. This was a maximum

of 1.05 ppl for the very smallest deliveries. For an average delivery, the surcharge appeared

to fall in the range 0.05 - 0.25ppl. In short, both these features taken together were found to

average 0.2 - 0.3 ppl and rarely exceeded 1 ppl for even the smallest sites.

Source: MMC (1990) op. cit. p 119.

More recent evidence supports the fact that this component does not appear to be a

significant factor in the higher prices seen in the Highlands and Islands. John Mumford of BP

Oil UK Ltd, giving evidence to the Scottish Parliament Enterprise and Lifelong Learning

Committee on Monday 31 January 2000 commented:

"I can confirm that the cost differential that we are talking about is of the order of 2p to 3p."

Source: Scottish Parliament, Official Report, 31/1/00, Enterprise and Lifelong Learning Committee, Col 491.

Clearly, higher costs of delivery were not the cause of the higher pump prices being

witnessed. From 2001 to 2005 the author was employed by Highland Council Harbours at its

Headquarters in Lochinver, Sutherland. The site purchased & sold 40,000 Tonnes or roughly

50,000,000 Litres of Marine Gas Oil for the fishing fleet in the North East Atlantic. This fuel

was delivered to Lochinver by sea and was bought very close to the NWE CIF price for

MGO. The contrast with Petrol & Diesel delivery prices was stark and unpardonable.

Higher Costs of Filling Station Operation / Lower Throughput

The second element of the fuel price in the Highlands and Islands which we require to

consider is the higher costs of operating a fuel station in the area concerned. This will have a

significant bearing on the retail price. Capital Spending on the filling station will require to

be spread over a much smaller number of litres sold. Operating Expenses will likewise be

122

considerable in relation to each litre sold.

Costs related to Capital Spending will include tank replacement, new pumps, and

expenditure to comply with the various stages of the Vapour Recovery Directive (VRD).

Derogations have been used with regard to the VRD, which have allowed rural filling

stations a longer time frame to meet the new regulations. Tank replacement remains a major

headache. Whereas high volume sites will receive large sums for investment as part of a

solus agreement, this funding will not be made available to low volume rural sites.

Independent site owners will be forced to fall back on their own capital resources. This has

inevitably caused a large number of site closures. Support has been offered to retailers under

the Scottish Executive's Rural Transport Fund. This funding has been inadequate. There is no

reason why all of the remaining sites in rural areas could not be designated as essential and

offered assistance with tank replacement. This should be done without delay. If this is not

done, the cost must be recovered from the rural consumer. This is not an option.

Rural filling station operating costs will also be higher than filling stations elsewhere. This

will again reflect lower throughput, and the consequent need to spread payroll and other

running costs over a lower level of sales.

What do these estimates mean for the market in question?

If we assume that average site throughput is half of the UK average, which is perhaps more

questionable now due to the declining number of sites, this would suggest a doubling of the

margin required to cover higher costs. In the UK market as a whole, the PRA estimate

margins to be between 0.75 ppl and 3 ppl.

Source: Scottish Parliament, Official Report, 31/1/00, Enterprise & Lifelong Learning Committee, Col 509.

If we assume this to be accurate, that would suggest a doubling of retail margin in order to

deal with a level of throughput 50% lower than elsewhere. Retail margin seen should be

around 1.87 ppl higher in the Highlands on average. Retail prices would include 2 ppl for the

123

extra cost of delivery. In short, extra fuel costs should average 3.87 ppl to take account of

delivery costs and the need for higher margin at rural sites with lower throughput. Very low

throughput sites with very remote locations, such as Arran and Islay will need higher margins

for retailers. Evidence was produced by Mike Lunan for Arran Council for Voluntary Service

in 1999 which showed that retail mark ups might be as high as 10 ppl in these most extreme

cases. VAT will also account for part of the differential. We should allow an extra penny a

litre to take account of VAT. The attached Table 4.2 shows that this breakdown seems to tie

in with the figures we calculated earlier for the prices earned by the wholesale and retail parts

of the supply chain. We would anticipate that the OFT will find similar figures as a result of

their enquiry. What can we deduce from this research into cost differentials in pence per litre

for the market as a whole?

The extra retail margin is approximately 1.87 ppl, the extra wholesale margin is 3.80 ppl, and

the extra VAT is 0.98 ppl. This gives a figure of 6.65 ppl in January 2000, averaged for

unleaded and diesel. We can apply these figures to the volume figures in table 2.16 to work

out the extra amounts each element of the supply chain earns in rural areas.

Element in Cost Structure

Jan 2000

Extra cost per

Litre

Number of Litres

Sold

Total Extra

Earned

Spot Price Nil 464,671,871 Nil

Wholesaler 3.80 464,671,871 17,657,531

Retailer 1.87 464,671,871 8,689,364

Duty Nil 464,671,871 Nil

VAT 0.98 464,671,871 4,553,784

Table 4.1 Source: Extra cost per litre (Retailer) from OFT (1998) op. cit. 11.9, p 72. All other figures Table 4.2.

The above table shows that based on the extra cost per litre, wholesalers would earn over

£17.6 million extra from delivering fuel in the Highlands and Islands. Are the extra costs of

delivery in the Highlands and Islands really that high?

124

Looking at this differential again in 2011 gave the following findings:

Element in Cost Structure

2011

Extra cost per

Litre

Number of Litres

Sold

Total Extra

Earned £s

Spot Price Nil 435,616,543 Nil

Transportation 1.640 435,616,543 £7,144,111

Wholesaler 2.604 435,616,543 £11,343,455

Retailer 2.604 435,616,543 £11,343,455

Duty Nil 435,616,543 Nil

VAT 1.370 435,616,543 £5,967,947

Table 4.1a

Source: Extra cost per litre from OFT 1432 (2012) Enclosure 3: Margin composition for Road Fuels. All other

figures Table 4.2a.

The OFT has itemised the differential between the Highlands and Islands and the UK

Average and has shown these in terms of pence per litre. Unfortunately the figure for the UK

is a total and the split per litre is not shown. VAT is known to be 20% of the figures above it.

Transport is spoken about as costing significantly more per litre and a figure of 1.64ppl is

attributed to the extra in this case. For wholesalers and retailers the differential has never

been successfully calculated. Each accuses the other of being economical with the truth. In

this (for once) they may both be accurate.

125

Costs per litre UK Highland UK Highland January 2000 Unleaded Unleaded Diesel Diesel Spot Price 10.40 10.40 10.92 10.92 Wholesaler 3.86 7.61 2.37 6.21 Retailer 2.70 4.57 2.70 4.57 --------------- --------------- --------------- --------------- Price Net of Duty & VAT

16.96 22.58 15.99 21.70

Duty 47.21 47.21 50.21 50.21 --------------- --------------- --------------- --------------- Price Including Duty

64.17 69.79 66.20 71.91

VAT 11.23 12.21 11.59 12.58 --------------- --------------- --------------- --------------- Retail Price 75.40 82.00 77.79 84.49 ======== ======== ======== ======== Table 4.2

126

Costs per litre UK Highland UK Highland Nov 2010 – Oct 2011 Unleaded Unleaded Diesel Diesel ppl ppl ppl ppl Spot Price (3) 45.78 45.78 44.50 44.50 Delivery/Unexplained 2.86 7.92 Wholesaler Margin (1)

7.60 4.32

13.30 4.42

Retailer Margin (1) 7.46 7.68 --------------- --------------- --------------- --------------- Price Net of Duty & VAT

53.38 60.42 57.80 64.52

Duty (2) 57.95 57.95 57.95 57.95 --------------- --------------- --------------- --------------- Price Including Duty 111.33 118.37 115.75 122.47 VAT 22.27 23.67 23.15 24.50 --------------- --------------- --------------- --------------- Retail Price (4) 133.60 142.04 138.90 146.97 ======== ======== ======== ======== Table 4.2a Source:

(1) OFT1432 (2012) “Petrol and diesel pricing in the Scottish islands” Enclosure 3, Margin Composition

(2) Adapted from Petroleum Review (2012) Retail Marketing Survey p12

(3) UK Prices from http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx Monthly Table QEP 4.1.1

Spot Prices checked at: http://www.indexmundi.com/commodities/?commodity=rbob-gasoline&months=60&currency=gbp&commodity=diesel (4) Price from https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/191825/qep411.xls Price Difference from Table

3.17, see page 94 above


http://www.indexmundi.com/commodities/?commodity=rbob-gasoline&months=60&currency=gbp&commodity=diesel

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/191825/qep411.xls

128

Barriers to Entry into the Rural petrol market

There are significant Barriers to Entry in the Highlands and Islands motor fuel market. These

help to explain why despite the assertion that monopoly profits are being earned in the

market, no serious competition has emerged to challenge the present incumbents. Much of

the following work is an adaptation of the theoretical analysis provided by C.C. von

Weizsacker in his 1980 work "Barriers to Entry, a Theoretical Treatment," published in

Germany by Springer-Verlag, Berlin. Von Weizsacker defined Barriers to Entry as follows:

"Barriers to Entry into a market then can be defined to be socially undesirable limitations

to entry of resources which are due to protection of resource owners already in the market."

Source: von Weizsacker, C.C., (1980) Barriers to Entry, a Theoretical Treatment, Berlin, Springer-Verlag, p 13.

He continued:

"Entry deterring strategies are not available if there are no structural barriers to entry."

We would seek to qualify this where the market concerned may constitute a Natural

Monopoly. Where such monopolies exist in rural and island areas, the retailer as we have

seen will enjoy low sales and profits. There is therefore little incentive for new entrants to

build new filling stations in remote parts of the Highlands and Islands. von Weizsacker

recognised that in such circumstances, entry may not occur:

"The profitability of the incumbent provides too little compensating incentives for entry."

Source: von Weizsacker (1980) op. cit. p 140.

and:

"given the initial cost disadvantage of entrants, they are only prepared to enter, if the market

price allows them later to obtain a profit greater than the opportunity cost of capital to be

invested in, say, plant and equipment."

129

We should bear in mind the special case nature of the rural petrol market as a natural

monopoly in the course of the following discussion. In adapting von Weizsacker's theory to

petrol wholesaling and retailing, we can look at the list of possible Barriers to Entry

identified by Bain (1956):

Absolute Cost

Advantages

Economies of Scale Product Differentiation

Superior Efficiency Finance Economies Goodwill

Shorter Supply Chain Technical Economies Brand Loyalty

Prime Locations Marketing Economies Advertising

Purchasing Economies Product Quality

Table 4.3

We can deal rapidly with the third category, product differentiation. Alain Anderton

considered petrol retailing in his textbook, "Economics." He commented:

"Many wholesalers try to brand their products. However, despite extensive advertising,

consumer loyalty to a particular brand of petrol is very weak." he continued:

"Consumers buy petrol on price, the location of petrol stations, the quality of service offered,

including opening hours, and the extent of additional facilities on sites such as shops or car

washes."

Source: Anderton, Alain, (1990) Economics, 1st Edn, Liverpool, Causeway Press Ltd, p 147.

We would concur with Anderton's analysis and his conclusion, product differentiation is not a

barrier to entry in the supply of petrol.

What of the other two categories?

Prior to the entry of the supermarket companies, it was widely held that there were absolute

cost advantages and economies of scale enjoyed by the existing majors and mini-majors

which would prevent the entry on a large scale of significant competitors in the supply of

130

petrol. It was assumed that such entrants would be required to purchase stock from the oil

majors and existing wholesalers and therefore could not be expected to initiate serious

competition on the basis of price. How then have the supermarkets managed to achieve their

success?

Absolute Cost Advantages

Supermarket firms enjoy a number of substantial advantages over the previous incumbent

firms. They have demonstrated that they have superior efficiency in their operating structure.

They operate mainly from prime city-centre locations, with high volumes of throughput

servicing a large and established customer base. The OFT Report (1998) identified the

turnover of supermarket sites as being 8.59 million litres pa compared with a figure of 2.56

million for company-owned sites. The report also considered the wholesale market and

concluded:

"at present, there seems to be no difficulty in obtaining supplies and the terms on which those

supplies are made available are almost always based on Platt's prices plus a small premium.

The premium over Platt's is usually less than 0.5 p per litre, covering transport costs to the

terminal and the costs of carrying the compulsory stock obligation on behalf of

supermarkets."

Source: OFT (1998) op. cit., para. 8.22, page 29.

This short supply chain means that they do not have huge amounts of assets tied up in

refining and distribution earning little or no returns. Buying on the Rotterdam Spot Market

allows them to undercut existing wholesalers. The supermarkets have not been attempting to

provide a nation-wide network, providing access for all. They have cherry-picked high

volume locations, linked in most cases to existing shop outlets. Differentiating against rural

customers on price has allowed the incumbent oil majors to compete by dropping prices

131

where they face supermarket competition and raising them where they do not.

Economies of Scale

Previous challenges to dominant incumbents were not of a scale sufficient to match the oil

companies economies of scale. Challengers were always below the optimum scale of

operations, and failed to meet the oil companies economies of scale. The supermarkets

entered the market on a scale sufficient to challenge the oil majors. This consequently

allowed them to redefine the shape of motor fuel retailing. Their entry into the motor fuel

market at a time of oversupply in oil company downstream activities, with a particularly

large supply overhang in Europe meant that the oil majors were unable to control

developments as they had in the past. Whether the short term gain to the consumer in terms

of lower urban motor fuel prices can be sustained in the long-run remains to be seen.

In the rural marketplace, the continuance of solus ties has to be reconsidered. Von

Weizsacker wrote:

"Real power of exploitation only arises if the party in such an ongoing relationship knows

that even in the long run it cannot be replaced by a competitor at reasonable cost..."

Source: von Weizsacker (1980) op. cit. p81.

In rural markets, no wholesaler will enter due to the high cost of establishing a presence in an

area where natural monopoly exists and firms are tied to incumbent wholesalers on a long

term basis. Likewise, in a market where incumbent independent retailers are being squeezed

out and where sales volumes are low and profits inadequate to generate a return, even on

fully depreciated assets, new duplication in the retail sector would seem like a crazy gamble.

We can rest assured that supermarket sites will not open up in truly remote areas. The

following diagram sets out the various possible market positions:

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Exit/Entry

Low High

C

om

pet

itio

n

T

oo L

ittl

e

(a)

(b)

Too

Much

(c)

(d)

Source: Adapted from von Weizsacker, C.C., (1980) op cit, p12.

At position (a) there will be a high price and a stable market position for the incumbents.

This would characterise the motor fuel market prior to the entry of the supermarket retailers.

This might be characterised as a Vendor's Paradise.

At position (b) there will be a high price and a volatile market situation. This would

characterise the rural market in the UK at the present time. Despite high prices, independent

retailers are exiting the market in excessively high numbers.

At position (c) there will be a low price and a stable market situation, with low entry and

exit. This might be described as a Consumer's Paradise.

At position (d) there will be a low price and a highly volatile market situation. This reflects

the current situation in urban markets, with independent retailers being squeezed out through

a combination of oil major solus ties, (suicide notes in present circumstances) and predatory

pricing from the supermarkets.

The Optimum Point would be in square (c) of the diagram. The big players (oil majors and

supermarkets) tell us to expect the market to end up in square (c). Independent retailers, the

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PRA and the public, especially the rural public, are much more inclined to see square (a) as

the ultimate destination.

Price Discrimination between Urban and Rural Areas

There is irrefutable evidence of price discrimination being undertaken in the Highlands &

Islands market. The OFT Report in 1998, in work conducted for them by NERA, concluded

that the UK could not be considered as one market. In the terminology used by the OFT, the

"relevant market" in their subsequent enquiry would be the Highlands and Islands market.

Part of the analysis of the relevant market, requires the OFT to look for "captive" customers

who can be discriminated against on the grounds of price. The position on captive customers

is set out in OFT Research Paper 1, (1992) "Market Definition in UK Competition Policy"

page 71. It states with regard to price discrimination:

"Successful price discrimination (by which we mean systematic and planned non-cost related

differences in prices between different classes of customer) is feasible only under certain

conditions. It requires the seller (or collectively, the sellers) concerned to have some degree

of market power, and it requires the ability to identify different customer groups and to

prevent the kind of re-sale between the groups which would cancel out the proposed

discrimination."

Source: OFT (1992) "Market Definition in UK Competition Policy" p71.

Highlands & Islands motor fuel customers can be classified as captive under the statement

above. Island markets are, by definition, captive. The cost of travel on all but the shortest

crossings would be prohibitive and would render the crossing uneconomic, at even the most

dramatic motor fuel price differential, if the intention was to save money by buying mainland

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motor fuel. Highland markets are likewise sufficiently remote from cheaper supplies

elsewhere as to render them captive.

All of the above points to the existence of price discrimination in the motor fuel market in

the Highlands and Islands. We have already seen the evidence on fuel prices which backs this

up. There is no doubt that fuel prices are higher. There is no doubt that the price differences

seen are more than cost reflective. Price discrimination is a fact.

What should happen in such circumstances?

The law in this area is governed by the new Competition Act 1998. Under the Act, Chapter II

prohibits:

"conduct by undertakings which amounts to an abuse of a dominant position in a market and

which may affect trade within the United Kingdom." Source: OFT (1999) The Competition Act 1998, The Major Provisions, (OFT 400, p2)

Specifically, it seeks to prevent:

"directly or indirectly imposing unfair purchase or selling prices"

and

"applying dissimilar conditions to equivalent transactions with other trading parties, thereby

placing them at a commercial disadvantage." Source: OFT (1999) op cit, p6.

The OFT should act over this situation, they choose not to do so.

Analysing the structure of the Urban Market

There are a number of factors which affect the total demand for motor fuel in urban areas,

and also the demand for fuel at individual sites in urban areas. Location is the first of these

factors. A well located site on a busy urban road will generate vastly more demand for its

products and services than will badly located sites on obscure B-class roads. If we look at the

urban market as a whole, what can we say about a further factor, its Price Elasticity of

Demand?

135

The market in urban areas is usually characterised by many competing outlets being

concentrated in a relatively small geographical area. In such circumstances demand overall

can be demonstrated to be price inelastic, but at the level of the individual outlet, the driver

for determining the level of demand will be price. In other words, whilst the overall level of

demand for motor fuel in a city can be predicted accurately in advance, what cannot be

predicted is the level of sales at a particular outlet within the city. Motor fuel has a relatively

small Income Effect compared either with total income, or with the purchase price parted

with in acquiring the car. There are no effective and legal substitutes for motor fuel as a

whole, but there are many alternative locations within the city at which motor fuel is

supplied. In individual outlets, retailers are price takers not price givers or setters. If they

increase their price, they know that they will lose volume as motorists switch to readily

available alternative outlets. Another factor is Income Elasticity of Demand. As the

population has become more wealthy, they have switched from bus or rail travel to car travel

as a sign of their increasing affluence. This demonstrates that motor fuel has positive income

elasticity.

Cross Elasticity of Demand can be demonstrated within and outwith the motor fuel market.

Within the market, there has been a dramatic switch away from 4-star leaded fuel to unleaded

petrol and diesel. There has also, in the long-run been a switch away from petrol both leaded

and unleaded to diesel. This reflects the better fuel economy offered by diesel.

Outwith the motor fuel market, a regime of high bus and train fares has discouraged a switch

from private to public transport. Lower fares would encourage less car usage, and it is

possible to demonstrate that there is a correlation between the uptake of public transport by

the population and petrol prices. High petrol prices encourage high usage of public transport.

Low petrol prices will deliver low usage figures for buses and trains. Petrol and cars are

complementary goods, cars and buses are substitutes, if car fuel prices and congestion

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charges are raised, sufficiently, people in the city will switch to buses, trams and the

underground. One other consideration on cross-elasticity is appropriate. This is the

appreciable switch from petrol to diesel. As was stated above, diesel offers better fuel

economy than petrol. Where the prices of these motor fuels are broadly similar, you would

anticipate, as fuel becomes ever more expensive, a noticeable increase in the demand for

diesel, at the expense of petrol. In fig 2.11, on page 21, we see that in 1986, Derv had a

26.8% share of the motor fuel market. This rose to 37.9% in 1995 (see fig 2.12) and to 39.7%

in 1999 (fig 2.12a) and to 57% by 2011 (fig 2.12b). Fractional distillation in refineries has

not been able to keep up with the demand for diesel. Oversupply of motor fuels is restricted

to petrol. As a premium product the price of diesel has risen significantly and now exceeds

the price of petrol at filling stations across Europe.

The final factor we consider here is the Price Elasticity of Supply. Supply in urban markets

both in total and to individual filling stations is price elastic. A small drop in the retail price

might lead to the withdrawal of the wholesale supply, and a small increase in market price

will always be matched by the wholesaler being willing to extend supply. If the retailer is

able to charge a premium price, either through having a captive market, or through an

absence of competition, or through tacit or open collusion not to compete on prices, the oil

major will want to supply that retailer with fuel, and to capture as much of the extra price

being charged as possible. Conversely, where a hypermarket opens across the road, then the

major will try either to limit the amount of support which they pay to the retailer or will fail

to support him adequately, and thus harry him into closing down the site. As was stated

above, the key factor to consider in choosing a retail site is its location. This is what will

determine the level of throughput, and it is the level of throughput which will determine the

extent of oil company support thereafter. A further factor is competition; the urban motor

137

fuel market will have a variety of retailers, both large and small, encompassing hypermarket

outlets, oil company owned sites and a (declining) number of independent sites. All these

outlets are contained within a relatively small geographical area, easily accessible to the

public.

This urban landscape is the one delineated by the OFT in their 1998 report. We can see that

the prima facie evidence is that there was vigorous competition with retailers opposing one

another on price grounds in the battle for volume. It was the changing market structure which

reduced the price of fuel to the urban motorist in the recent past. The urban market saw both

oil major outlets and hypermarket outlets battle for market share, competition flourished. At

present, there is less evidence of the kind of competition which devastated the independent

retailing sector. The rate of site closures seems to have slowed, partly as a result of less

competition on price than was seen in the past. Margins have risen, and the UK no longer

enjoys the lowest fuel prices net of duty and taxes. Predation has succeeded in removing the

independent retailer from a significant role in the market. The way is now clear for the oil

majors and hypermarkets to compete "less vigorously" (or, collude) and earn higher returns.

The OFT needed evidence of this last stage of successful predation to be willing to act to stop

it. The victims are now out of business and the OFT view is presumably that it would

therefore be pointless to do now what they should have done then, intervene to stop the

process.

Population is also clearly a driver in the motor fuel business. The greater the population the,

greater the number of retailers. The greater the number of retailers, the greater will be the

attraction for wholesalers of operating in this area. Population brings diversity of supply, the

greater the diversity, the lower the price. Geography is a further important feature in the

urban motor fuel market. Proximity to refineries has little bearing on the price of motor fuel.

The population within the filling station catchment area will be large, there will be locally

138

available alternative sources of supply, alternative modes of transport in the form of buses

and trains will be available. Unless there is collusion between the players, the market will be

characterised by competitive fuel prices, as only in a cartel-like situation would it be possible

for wholesalers or retailers to push up prices without losing volume. The urban market in the

UK did not operate in this fashion in the 1990's or in the new millennium.

Having got rid of the independent sector, there will be more scope for the market to be shared

out in future by the oil majors and hypermarkets. With planning restrictions and the costs

associated with setting up a new site, with closed sites concreted-in to prevent pollution and

therefore unable to be reopened, this may prove to be lucrative for hypermarkets and oil

majors. The OFT would be directly to blame should this happen. Their refusal to intervene to

correct the problems the independents were suffering from through predation, has left

the market much more highly concentrated and prone to abuse.

The following diagrams show the structure of the UK motor fuel market, and also the

Highlands & Islands market. In the city, the total demand for motor fuel can be predicted

with certainty in advance. Demand is inelastic, the figure used by Maddison, Pearce et al, is

that typical price elasticity of demand for petrol shows that a 10% increase in petrol prices

will reduce demand by 1-2% in the short run, and by 3-4% in the long run.

139

The overall market for petrol in a city

fig 4.1

Demand is relatively stable in the large range of fuel prices between (a) and (b), despite

increases in fuel price. However, above point (a) individuals will begin to switch to bus or

rail alternatives. Below point (b) individuals will anticipate price rises and will accordingly

stockpile fuel. Clearly, demand is determined by the number of vehicles and not by the price

of fuel. Suppliers will have a minimum price below which they will go out of business. From

there to the equilibrium point and beyond, small price rises will always bring forth additional

supply. This process would continue until refinery capacity restraints are met, beyond which

further additional supply could only be obtained at a much higher cost.

At the individual outlet level in the city, a small drop in price will lead to an appreciable

increase in quantity demanded, assuming other retailers fail to respond. Quantities will

fluctuate between sites, gains in volume at one site being offset by losses elsewhere. Again, a

floor price for supply is assumed.

140

An individual outlet in a city

fig 4.2

An increase in price at any individual site would have an equal and opposite effect on

quantity traded. Demand here is highly price elastic.

Sites will be at risk where high prices lead to low volumes. Wholesalers can easily

manufacture such a position by failing to adequately support a site with selective price

support (SPS). By doing so they can force the retailer to shut up shop.

Tied down by having signed a solus agreement, the retailer cannot switch supplier. He must

accept supplies from his wholesaler at whatever price the latter chooses, even when they

cannot compete on price with neighbouring sites if they do so. All too often in the recent

price war the retailer found that the solus agreement was a suicide note.

The rural market was found by the MMC in 1990 not to differ in any material way from the

competitive model found in urban conurbations. True, the market may not have been as

competitive as elsewhere, but it was found to be competitive. Let us again look at the

evidence for this assertion.

141

As with the overall market for motor fuels in urban areas, the rural petrol market is

characterised by very low price elasticity of demand. The EKOS study cited evidence from

the Institute for Fiscal Studies which showed that residents in rural areas are less likely than

urban residents to reduce their demand for motor fuels in response to a rise in prices.

Source: EKOS (2000) op cit, p31.

The evidence that rural motorists would be unable to react to price signals is also referred to

by Maddison, Pearce, et al, (1996) who comment:

"Rural car drivers will be needlessly penalised by a system which increases the price of fuel

on which they are dependent through an absence of public transport alternatives."

Source: David Maddison, Pearce, D., Johansson, O., Calthrop, E., Litman, T., Verhoef, E., (1996) "Blueprint 5,

The True Costs of Road Transport" London, CSERGE/Earthscan, page 78.

All the evidence suggests that it would take a monumental increase in fuel prices to persuade

the rural motorist to switch from the car to any other means of conveyance. In rural areas

very often, no such alternative exists.

This market differs from the urban market in that the individual sites are often not facing

competitive pressures. Most sites in the Highlands and Islands are independently owned and

tied by the ubiquitous solus agreement to their supplier; BP, Shell, or Esso.

Stand alone sites cannot influence the price which they are charged by the oil majors, or their

distributors. They are price takers. Consequently, they have little control over their retail

prices. This view is now supported by the OFT who commented in 1998:

"The MMC found that wholesalers' influence over the price of independents was less than for

company-owned sites. This would appear to be less true in the current situation." Source: OFT (1998) op cit, p 51

This would appear to be a euphemism for "false" which would not require any corrective

action on the part of the OFT.

142

The overall market for petrol in the Highlands & Islands

fig 4.3

Total demand is price inelastic in rural areas. It will be relatively fixed as in urban areas for a

wide variety of prices. Supply, given the excess capacity which exists in oil refining, will be

likely to remain price elastic for some time to come. Output can still be easily expanded to

meet any increase in demand. There is a very low substitution effect for motor fuels in total,

as people have no alternative to car travel due to the unavailability of public transport. There

is a low income effect for motor fuel, and a high income effect for cars. When motor fuel

prices rise, people do not discard their cars. Higher incomes will mean more cars. Unlike in

cities with available public transport, people in the countryside cannot switch to public

transport when petrol prices rise.

The diagram below illustrates the position for an individual outlet in the Highlands &

Islands. At this level, there is an appreciably different picture arising from the interaction of

supply and demand when compared with an outlet in an urban location. On the demand side,

there will be a marked reluctance on the part of the consumer to switch from one site to

another.

143

An individual outlet in the Highlands & Islands

fig 4.4

Customers will be faced with long journeys to find an alternative retail site. For instance, the

site in Lochinver, which was awarded significant grant assistance by Caithness & Sutherland

Enterprise, was made the award to avert the threat of closure. The nearest alternative site was

30 miles away. Motorists would have been faced with a sixty mile round trip just to fill up

their tank. In addition to the threat posed to rural motorists, this would impact on the survival

prospects for rural businesses, and would have also threatened the vital tourist trade in north

west Sutherland. In the circumstances, this was a sensible use of taxpayers’ money.

This outlet's supply will be price elastic. Oil companies have previously threatened to

withdraw supplies completely if they are required to in any way alter their existing price

setting mechanism. This mechanism gives them free reign to set whatever conditions they

wish before agreeing to supply to retailers who, in the context of the Highlands & Islands are

nearly all stand alone independent retail sites.

A complex monopoly market, in which suppliers are selling a product with almost perfectly

inelastic demand to a collection of customers whose requirements are individually

insignificant and who have all signed contracts stating that they will purchase the product at

144

whatever price the vendor chooses to set, in a market with little or no effective competition

from supermarkets and with wide geographical dispersion of retail sites is utterly at variance

from the urban model presented earlier. Yet this is the model which the MMC found to be

the same as, rather than materially different from, the urban model.

Subsequent events and in particular, the OFT Report in 1998 have gone some way to

discredit the MMC's position. The following points should be made in summary:

* That the OFT have been wrong in the past

* That urban & rural markets are different

* That retailers are not setting prices in rural markets

* That oil majors set prices in rural markets

* That price rises at one rural site don't switch demand to another site

* Rural demand is inelastic to a degree which differs materially from city sites

* Rural sites have materially less competition than urban sites

Many of the above findings are now accepted in whole or in part by the OFT. This was not

the case in late 1996 when we produced our last report. We are making progress.

The diagrams we have produced show that the markets are different. They operate in

different ways and the monopolists have different degrees of control over urban and rural

markets. If the diagrams for urban and rural filling stations were the same, then obviously the

OFT, MMC, DTI view of the world should be the one which prevails. That the markets are

utterly different suggests that their view is a fallacy, and that their continued inaction is

insupportable. The viewpoint of Highlands & Islands councils has been right all along.

Local Monopolies in the Highlands & Islands Motor Fuel Market

We should move on now to look at the most appropriate way of categorising the market at

different levels in the Highlands, and will do this in terms of generally accepted economic

145

typologies. The 1979 MMC Report concluded that a "Complex Monopoly" existed in the

supply of petrol by wholesale in the United Kingdom.

Source: MMC (1990) op cit, p 275.

The following page of the report stated:

"The MMC found that a complex monopoly existed because at least one-quarter of the petrol

supplied in the United Kingdom was supplied by wholesalers who operated selective price

support or owned petrol retail outlets, but they concluded that the practices they examined

did not and were not expected to operate against the public interest."

Source: MMC (1990) op cit, p 276.

There is no diagrammatic representation of this model provided to show cost, revenue,

supply or demand information. We must therefore provide our own illustrations. Since 1996

when the following diagrams were passed to the OFT, no-one from the OFT has replied

challenging what is set out below.

The following diagram shows the demand for fuel in a Western Isles outlet. As can be seen,

price is very high. It can also be seen that the quantity involved is very small. These two

factors combine to provide a schedule which has a very steep slope. Demand is almost

perfectly price inelastic.

146

Demand for fuel at a Western Isles outlet

fig 4.5

This reflects several factors which we noted earlier in our discussion. There are often no

competing outlets available supplying motor fuels. There is little or no public transport, and

where public transport is available, the frequency of the service provided will be extremely

low. In other words, there is a low substitution effect in what should be recognised as a

captive market. Motor fuel also has a relatively low income effect in comparison to the cost

of the vehicle. Taken together, these factors mean that motorists will be extremely unwilling

to cease travelling by car.

The following diagram shows the demand for fuel at a City Centre location. As can be seen,

price is going to be significantly lower than at a rural site. we can also see that the quantity

involved is very large in comparison. These two factors combine to provide a schedule which

has a very shallow slope. Demand is almost perfectly elastic.

147

Demand for fuel at a City Centre outlet

fig 4.6

Unlike the situation which subsists in rural areas, the urban market is governed by the

following factors. There are plenty of competing outlets supplying motor fuels. This will

include supermarket sites which compete on price with oil major owned sites. There is access

to public transport alternatives to car travel. In such circumstances, there will be a high

substitution effect. Motor fuel will continue to be purchased as it has a relatively low income

effect, but it will be bought elsewhere at competing outlets if the outlet doesn't compete on

price. A tiny increase in price might lead to a huge contraction in demand, and a consequent

fall in revenue and profits.

Price Discrimination in the UK Motor Fuel Market

The diagram below graphs what happens in the market for motor fuel in terms of revenue

generated per litre sold. The first fragment of demand will be the sale of motor fuel at island

sites. These locations will have the highest prices but will generate a small quantity in terms

of demand. Mainland villages will have a slightly lower price, and a slightly higher quantity.

148

Price Discrimination in the UK Motor Fuel market

Source: Adapted from Laidler, D, (1981) Introduction to Microeconomics, 2nd Edn, Philip Allan, p 192.

fig 4.7

Prices fall gradually thereafter, as the rural monopoly profit is eliminated. Volumes are seen

to rise as the largest part of the market is found in urban locations. Taking the two extremes,

we can see that island sites will have much higher prices and much lower volumes than sites

in large cities.

At the time of our previous edition the HIAG group had just looked for evidence of price

discrimination within the Highlands and Islands. What they found was significant. They

commented:

"Within the Moray firth area alone, the price differential was 16p a litre, rising consistently

as you travelled west and north from Elgin to Dornoch. This amounts to a differential of over

£7 on a tank full of petrol. Between Thurso and Wick a price difference of 6.5p a litre or 30p

a gallon prevailed."

Source: Highland Council (March 2000) "Lobbying Brief - The Campaign for Fair Fuel Prices" Inverness,

Highland Council.

149

UK Motor Fuel Retailing pre and post Supermarket entry

fig 4.8

Researchers looking at petrol prices now have a variety of sources to assist them. These

included work done both by Arval/PHH and Catalist, now known as Experian Catalist see

their website:

http://www.catalist.com/Products%20and%20Services/Fuel%20price%20data.aspx

The above diagram illustrates the change in price structure in the UK market since the arrival

of supermarkets. Rural prices are 8.2 ppl higher on average in the Highlands & Islands than

in the rest of the UK. At the time of publication of the MMC report in 1990, the difference

was less than 2 ppl. The market will also have seen a fall in fuel price in cities. The effect of

the entry of supermarkets has been to widen the urban / rural price dichotomy.

MMC / Oil Majors' Case

The diagram below represents the MMC and Oil Majors' view. They believe that there exists

either a normal profit monopoly, or monopolistic competition in the UK motor fuel market.

Monopoly Profit (or abnormal profit) is zero. Firms earn no more than normal profit, and no

more than they would earn in a competitive market.

150

MMC / Oil Majors' Case

fig 4.9

Two further diagrams are provided in this section. The first shows the true position in the

countryside. It shows the operation of a rural monopoly, with the shaded area representing

the monopoly profit earned. Average Revenue (AR) is well above Long run Average Cost

(LAC) at the point where Long run Marginal Cost (LMC) equals Marginal Revenue (MR).

Actual Case: Local Rural Monopoly (Long run)

fig 4.10

151

This situation will persist in the long run as there is a captive market with significant barriers

to entry. In many cases, there will be a natural monopoly situation, as two competing sites

would not be viable. In such circumstances, the market would need regulation and/or price

controls to prevent customers being exploited by the monopolist.

The following diagram shows the situation in urban markets during periods of price

competition between supermarkets and oil company owned sites. It illustrates a short run

position where predatory (loss-making) pricing is driving incumbent independent retailers out

of urban markets.

Actual Case: Urban short run loss-making neo-perfect competition

fig 4.11 This position cannot exist in the long run as all the incumbents are losing money and would

be forced out of business. In the motor fuel retailing business, it persisted long enough for the

oil majors and supermarkets to capture a larger share of the retail market by driving out much

of the independent retailing sector. Prices have since recovered to profit making levels,

allowing the beneficiaries to charge higher prices and to sell larger quantities. This is a

textbook example of successful predation. The OFT view is that it never took place.

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Recipients of Abnormal Profits

It will be clear from work already carried out in this section that the oil companies claim high

prices are due to the additional cost of delivery in the Highlands & Islands. In reviewing the

previous report, Nigel Driffield of the Cardiff Business School commented:

“The most damning evidence would be evidence of intra-firm price differences over small

distances.”

Evidence of such differences should be presented here.

In looking at presenting its findings to the OFT, HIAG considered price differentials in the

inner Moray Firth area. Surveying the price of fuel from Elgin in Moray to Dornoch in

Sutherland, the HIAG group found that on 21st January 1999, the price of unleaded fuel in

Elgin was 61.9 pence per litre. In Dornoch in Sutherland at the same date, the price was 77.9

pence per litre, a difference of 16 pence per litre. This could not possibly be accounted for by

the cost of delivery. The following table shows the movement in fuel prices as you travel

north from Elgin.

Location Unleaded Price

Pence per Litre

Price Differential from

Elgin Elgin 61.9 0

Inverness 65.9 4.0

Evanton 69.9 8.0

Tain 70.9 9.0

Evelix 71.9 10.0

Dornoch 77.9 16.0

Table 4.4

Cost of delivery for fuel was worked out by Mr. Simon Cole-Hamilton of Inverness Chamber

of Commerce to be:

153

“less than 0.004ppl per mile. In other words a round trip of 250 miles for a tanker would add

just 1p plus VAT to the price of a litre of fuel. On this basis delivery to anywhere on the

mainland should not add more than 2p at the most to fuel prices.”

Retailers continue to exit the market, and it cannot be argued that they are the ones earning

abnormal profit. They would not choose to exit a market in such circumstances. They may be

forced to exit if despite high prices, the oil major, whilst not refusing to supply, will only

continue to sell to the site at such a high price that the retailer cannot afford to purchase from

the existing wholesaler, and cannot locate an alternative supplier. It is believed that a number

of sites may well have closed as a result of such circumstances.

Why is this distinction between refusing to supply and refusing to supply at a realistic price

important?

The European Court in Commercial Solvents v Commission [1974] ECR 223, [1974] 1

CMLR 309, held that refusal to supply an existing customer by a dominant undertaking can

be an abuse of a dominant position. To refuse to supply at a reasonable price has not, as yet,

been so held. Hence rural retailers will continue to exit the market as the law, both EU and

UK does not offer protection at present. Where the retailer competes with the wholesaler at

an adjoining retail site, the level of protection offered is inadequate. The retailer will be

forced, either to charge a high retail price as a result of a high wholesale price, or to go out of

business entirely and relinquish the entire market to their wholesaler’s retail site. Clearly, this

should be held to be abuse of a dominant position, but the law is not specific in prohibiting

this behaviour. In consequence, the wholesaler might be able to earn an abnormal profit.

What evidence have we that this might be the case?

The evidence found in the last study of the market cannot be added to. Due to the takeover of

the operations of S & JD Robertson by BP Oils, the evidence of such abnormal profit has

154

been buried in the consolidated accounts, no figures for the disaggregated operation in the

Highlands and Islands is available. We must rely on the evidence generated previously, and

also on the fact that BP felt that the Robertson business was sufficiently lucrative to be

willing to pay to take it over. This forward vertical integration by BP is the only such instance

in the entire UK market that this author is aware of. The Robertsons have succeeded in

building a business capable of earning abnormal profit, and in selling the business on to BP

presumably at a price reflective of its profitability. Since the last edition of this guide was

published, BP has disposed of the S & JD Robertson operation to GB Oils. As we go to press

(May 2013) the OFT’s investigation into wholesale operations in the Scottish Islands is

ongoing.

Location Unleaded Price

Pence per Litre

Price Diff re

Inverness ppl

Inverness - Morrisons 134.9 -

Nairn - Sainsbury 136.9 2.00

Alness - Morrisons 135.9 1.00

Tain - Tesco 137.9 3.00

Evelix – Gleaner 143.9 9.00

Lairg - Gulf 145.9 11.00

Table 4.4a Source: http://www.petrolprices.com/members-search.html?search=IV19+1DY

The above table shows the work re-performed in August 2013 just prior to going to print.

Inverness is now the cheapest location with the inner Moray Firth staying pretty close in

terms of price. Beyond Tain is another world where prices are very much in excess of those

found in supermarket sites on the other side of the Dornoch Bridge.

The following tables; 4.6, 4.7, and 4.8 show the returns earned by the three wholesalers in the

Highland market at the end of the 1980’s. This author still holds that the return earned by S &

JD Robertson was excessive. The OFT disagreed with the author, it is clear from their

decision to take the business over that BP agreed with the author, and not with the OFT. As

http://www.petrolprices.com/members-search.html?search=IV19+1DY

155

the cost of acquisition by BP will be included in the operating expenses of this unit, the

return on capital will presumably have fallen over the subsequent period. The veil that BP

hide behind is however rather thin. Returns in this industry are notoriously low. To have

dismissed the finding of abnormal returns, the OFT must have gone outside the industry to

define what was normal. No justification or explanation of this decision was ever received by

this author from the OFT.

Sector Difference

1999

Price Difference

Pence per Litre

Extra Cost to Highlands

& Islands Retail Margin

(Inc. Operating Cost)

1.870 £8,689,364

Wholesale Margin

(Inc. Delivery Cost)

4.004 £18,605,462

VAT 1.028 £4,776,827

Total Differential 6.902 £32,071,653

Table 4.5

The above table shows the allocation of the price differential calculated for 1999 between the

various players in the Highlands & Islands market. The average differential for 1999 was, at

6.902 ppl slightly higher than that calculated for January 2000. It has been allocated in

accordance with the method established in Table 4.1 above, using the figures for 1999 found

in Table 3.16. It shows that the retailer earns 1.87 pence per litre more than an average UK

site. This translates into an extra £8,689,364 in revenue. We accept that this is cost reflective.

Extra VAT can be calculated using the following formula based on the gross price per litre

17.5/117.5 x 6.902 pence per litre. This shows the chancellor’s take to be 1.028 pence per

litre, or £4,776,827 in extra VAT. This leaves a sum of £18,605,462 unallocated, or just over

4 ppl. This sum must be attributed to the wholesaler. One further point should be made here.

The reason given for higher wholesale margin is that it is cost reflective. That the wholesaler

is seeking to recover the additional cost of delivery in remote areas through charging a higher

price to the rural retailers. How much of this additional 4.004 ppl can be attributed to the

higher cost of delivery? Simon Cole-Hamilton’s work suggests that the extra cost would not

156

exceed 2 ppl in a worst case scenario, and would, on average, not exceed 1 ppl.

In these circumstances, the abnormal profit would be 3.004 ppl, or £13,958,743 per annum

for the previous year, 1999. This abnormal profit arises from price discrimination against

rural retailers. The wholesaler is applying dissimilar conditions to similar transactions, and

should be held to account for this.

Sector Difference

2011

Price Difference

Pence per Litre

Extra Cost to Highlands

& Islands Retail Margin 2.604 £11,343,455

Wholesale Margin 2.604 £11,343,455

Transportation 1.640 £7,144,111

VAT 1.370 £5,967,947

Total Differential 8.218 £35,798,968

Table 4.5

Conclusions

In this section we have looked at the urban / rural price dichotomy. We have considered this

in relation to the structure of the urban and rural motor fuel markets. We have looked to find

the recipients of abnormal profits and have found as follows:

* The urban market in the UK operates in a competitive manner.

* The rural market in the UK appears to provide abnormal profits

* Higher costs of delivery do not explain higher wholesale prices

* Filling station operators are not profiteering

* Higher retail prices charged are due to higher wholesale prices and operating costs

* Wholesalers appear to earn abnormal profits through price discrimination in rural markets

* Wholesalers are applying dissimilar conditions (prices) to similar transactions

* The price of fuel in rural areas is indicative of collusion amongst & not competition

between wholesalers

* Wholesalers have not refused to supply retailers, but they have refused to supply at a

realistic price. This might appear to constitute abuse of a dominant positio

157

S & JD Robertson Group Ltd 1994 1993 1992 1991 1990 1989 1988 YEAR ENDED 31st OCTOBER

TURNOVER £65,477,010 £68,010,864 £64,576,901 £72,815,010 £75,500,915 £72,993,400 £63,999,250 GROSS PROFIT £5,429,029 £5,229,179 £4,764,184 £4,749,778 £4,733,664 £5,279,000 £5,139,289 GROSS PROFIT % 8.29 7.69 7.38 6.52 6.27 7.23 8.03 PROFIT BEFORE TAX £788,495 £843,852 £949,316 £1,159,108 £1,121,978 £1,143,909 £1,208,884 FIXED ASSETS £6,111,625 £5,196,300 £5,556,165 £4,412,796 £4,083,573 £3,587,615 £3,163,529 RETURN ON FIXED ASSETS % 12.90 16.24 17.09 26.27 27.48 31.88 38.21 SHAREHOLDERS' FUNDS £6,252,119 £5,759,089 £4,599,395 £4,599,395 £3,846,513 £3,063,372 £2,327,065 RETURN ON SHAREHOLDERS' FUNDS % 12.61 14.65 20.64 25.20 29.17 37.34 51.95

PAINTINGS £930,834 £871,979 £773,687 £487,855 £419,588 £392,888 £173,188 NUMBER PLATES £51,966 £51,966 £51,966 £46,948 £22,930 £22,930 £3,930 Source: Companies House Annual Accounts

Table 4.6

158

Gleaner Oils (Highland) Ltd 1994 1993 1992 1991 1990 1989 1988 1987

Note : Consolidated From 30/4/94

TURNOVER £0 £0 £0 £0 £0 £0 £0 £0 GROSS PROFIT £270,597 £788,297 £763,334 £744,387 £621,835 £616,608 £513,650 £450,613 PROFIT BEFORE TAX £116,901 £49,828 £121,190 £110,353 £89,216 £136,775 £96,185 £53,363 FIXED ASSETS £0 £877,292 £816,115 £685,246 £175,104 £215,959 £239,615 £183,771 RETURN ON FIXED ASSETS 0.00 5.68 14.85 16.10 50.95 63.33 40.14 29.04 SHAREHOLDERS' FUNDS £790,846 £710,003 £669,108 £579,221 £490,777 £440,160 £356,556 £276,645 RETURN ON SHAREHOLDERS' FUNDS 14.78 7.02 18.11 19.05 18.18 31.07 26.98 19.29

Source: Companies House Annual Accounts

Table 4.7

159

Highland Fuels Ltd 1995 1994 1993 1992 1991 1990 1989 1988

Year to 31st December (14 Months)

TURNOVER £22,943,251 £21,675,585 £19,671,040 £17,196,791 £18,195,573 £20,047,139 £20,421,985 £21,343,441 GROSS PROFIT £270,597 £270,597 £788,297 £763,334 £744,387 £621,835 £616,608 £513,650 GROSS PROFIT % 1.18 1.25 4.01 4.44 4.09 3.10 3.02 2.41 PROFIT BEFORE TAX -£94,838 £221,669 £254,863 £307,370 £224,250 £235,327 £167,638 £190,780 FIXED ASSETS £1,628,276 £1,280,352 £748,893 £490,839 £411,424 £532,557 £407,298 £413,642 RETURN ON FIXED ASSETS -5.82 17.31 34.03 62.62 54.51 44.19 41.16 46.12 SHAREHOLDERS' FUNDS £1,457,204 £1,498,553 -£49,708 £288,485 £255,084 £105,227 -£45,455 £151,852 RETURN ON SHAREHOLDERS' FUNDS -6.51 14.79 -512.72 106.55 87.91 223.64 -368.8 125.64

Source: Companies House Annual Accounts

Table 4.8

160

GB Oils Limited 2011 2010 2009 2008 2007

YEAR ENDED 31st MARCH

TURNOVER £3,150,586,652 £1,992,527,888 £1,927,958,502 £1,128,196,744 £443,502,063 GROSS PROFIT £192,995,703 £124,485,324 £118,063,854 £57,599,459 £24,268,030 GROSS PROFIT % 6.13 6.25 6.12 5.11 5.47 PROFIT BEFORE TAX £40,941,604 £19,542,376 £27,634,778 £10,153,553 £2,500,484 FIXED ASSETS £290,056,073 £233,326,502 £143,772,985 £105,475,343 £49,891,117 RETURN ON FIXED ASSETS % 14.12 8.38 19.22 9.63 5.01 SHAREHOLDERS' FUNDS £49,122,130 £29,374,967 £22,899,568 £12,684,923 £4,236,776 RETURN ON SHAREHOLDERS' FUNDS % 83.35 66.53 120.68 80.04 59.02

INTANGIBLE ASSETS £129,484,852 £104,063,903 £85,324,849 £58,327,188 £14,977,043

Source:http://www2.creditsafeuk.com/?id=3006

Table 4.9

161

Gleaner Oils Limited 2010 2009 2008 2007 2006

YEAR ENDED 31st DECEMBER

TURNOVER £117,538,884 £102,993,598 £123,699,252 £103,285,110 £99,810,156 GROSS PROFIT £8,457,981 £7,111,132 £7,763,706 £6,656,206 £6,648,407 GROSS PROFIT % 7.20 6.90 6.28 6.44 6.66 PROFIT BEFORE TAX £670,432 -£241,110 £647,046 £487,593 £655,752 FIXED ASSETS £5,402,619 £5,363,613 £5,438,646 £5,025,519 £4,171,954 RETURN ON FIXED ASSETS % 12.41 -4.50 11.90 9.70 15.72 SHAREHOLDERS' FUNDS £6,588,825 £6,365,473 £6,555,953 £6,090,506 £5,665,809 RETURN ON SHAREHOLDERS' FUNDS % 10.18 -3.79 9.87 8.01 11.57

INTANGIBLE ASSETS £0 £14,286 £17,143 £20,000 £0


Table 4.10

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Highland Fuels Limited 2010 2009 2008 2007 2006

YEAR ENDED 31st DECEMBER

TURNOVER £173,621,656 £132,267,350 £194,646,596 £140,326,886 £117,012,936 GROSS PROFIT £13,327,635 £11,833,489 £12,681,785 £10,481,979 £8,711,522 GROSS PROFIT % 7.68 8.95 6.52 7.47 7.44 PROFIT BEFORE TAX £2,910,420 £2,416,473 £3,218,948 £1,154,822 £743,774 FIXED ASSETS £5,884,905 £6,201,579 £5,491,835 £4,993,534 £4,519,640 RETURN ON FIXED ASSETS % 49.46 38.97 58.61 23.13 16.46 SHAREHOLDERS' FUNDS £11,390,811 £9,643,241 £7,466,498 £5,714,708 £5,385,104 RETURN ON SHAREHOLDERS' FUNDS % 25.55 25.06 43.11 20.21 13.81

INTANGIBLE ASSETS £199,223 £274,733 £354,673 £130,119 £157,860


Table 4.11

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5) Laissez-faire & the Motor Fuel market

This Chapter deals with Government monitoring of the motor fuel market. It will consider:

* The role of Government; Local, Scottish, Westminster & Europe

* Legislation; National and European

* Enquiries into the Motor Fuel Market

* Conclusions from this section

The Role of Government:

Local Government

The first part of this section looks at the tasks performed by local government in the

monitoring of the motor fuel market. Highland Council’s TEC Services, which took on the

mantle of Environmental Services and Trading Standards inherited from Highland Regional

Council, is inter alia responsible for ensuring that motor fuel retailers comply with relevant

legislation. The Planning Department are involved in vetting proposed new motor fuel retail

developments, and the Valuation Department are involved in calculating the Rateable Value

of premises, based for filling stations, amongst other things, on the level of throughput. In

terms of market regulation, local government departments are only able to bring possible

breaches to the attention of the Office of Fair Trading (OFT), which is charged with

investigating and reporting.

Scottish Parliament

The Scottish Parliament has no locus in the area of Competition Policy. This matter is a

reserved power, and falls within the remit of the Westminster Parliament. As a consequence

of this, the Parliament’s role, in committee, is restricted to investigation of the motor fuel

market, indeed, they are not even empowered to require the OFT to attend and give evidence

165

to the Committee (see Scottish Parliament, (31/1/2000) Official Report, Enterprise and

Lifelong Learning Committee, Col. 473-474). Following on from their investigation, the

Enterprise & Lifelong Learning Committee published their findings in report format,

making recommendations to the Executive as to the strategy which they might wish to adopt.

This in no way binds either the Executive or the Parliament to any future course of action.

Westminster Parliament

Competition Policy falls, as a reserved power within the locus of the Westminster

Parliament. In overall charge of this policy area is the Department of Business, Innovation

and Skills (BIS) which succeeded to the role of the Department of Business, Enterprise and

Regulatory Reform (DBERR). DBERR in turn succeeded the Department of Trade &

Industry.

Conduct of the day-to-day operation of the policy falls within the remit of the Office of Fair

Trading (OFT). Detailed investigation of particular problems can be referred by the OFT to

the Competition Commission, which succeeded the Monopolies and Mergers Commission

(MMC) in this role.

The Minister responsible for the monitoring of the motor fuel market is Vince Cable

Secretary of State for Business, Innovation and Skills (also President of the Board of Trade).

Dr Cable has a right of veto over any recommendations made by the Competition

Commission, and also over referrals by the Director General of Fair Trading (DGFT) who

heads up the OFT. The Competition Commission is responsible for the conduct of detailed

investigations into the motor fuel, and other industries on referral from either the Secretary of

State for Business, Innovation & skills or from the DGFT. The Office of Fair Trading is

responsible for ongoing monitoring of the industry and for periodic reviews in more

detail. Their findings can lead to a referral to the Competition Commission for a more

166

detailed review, but in any case, the DTI has a right of veto over any recommendations made

by the OFT. Most complaints regarding the present system centre around the fact that the

tripartite structure allows the buck to be passed with comparative ease. BIS can claim that it

is the job of the OFT to initiate a Competition Commission inquiry, and vice versa. The

Competition Commission, a Quango whose membership does not give it sufficient continuity

or breadth of political or economic opinion, is widely seen as obstructive of even the OFT’s

proposals for investigation. Government assertions that all this operates swimmingly was

challenged by the last DGFT, Bryan Carsberg, who stated:

“I would favour the establishment of a unitary competition authority for the UK, headed by a

small group of full time commissioners, with procedural safeguards to separate the

investigatory and adjudicatory functions. This would improve the operation of the UK

system.” (Source: Carsberg, Bryan (24/2/95) “Need for unitary competition authority” London, Financial Times)

This could hardly be said to constitute a ringing endorsement of the present UK system.

European Commission

At the European level, the Competition Commission (formerly DG IV) is responsible for the

development of Competition Policy. The UK Competition Act 1998 discussed below is

applying EC law in a UK context, and it is clear that this is a policy area where the influence

of Europe is all pervasive. Where the Commission has refused to act in the past is over the

issue of price. Here the doctrine of subsidiarity appears to apply. A reply from Karel Van

Miert, then Competition Commissioner to a letter questioning the applicability of European

legislation in a UK context with regard to motor fuel prices stated:

“Price regulation....being a matter of national policy....is not an area in which the

Commission is competent to act,”

(Source: Van Miert, Karel (19/10/95) Letter on rural petrol pricing, Brussels, European Commission)

167

Legislation

UK Legislation

There are three main pieces of legislation in this area which concern us. These will be

considered in the chronological order of their enactment.

The first of these is the Fair Trading Act 1973, the second is the Competition Act 1980, and

the third is the Competition Act 1998.

Fair Trading Act 1973, S84 (1) (d)

This section of the Fair Trading Act 1973 states that:

“In determining for any purposes to which this section applies whether any particular matter

operates, or may be expected to operate, against the public interest, the Commission shall

take into account all matters which appear to them in the particular circumstances to be

relevant and, among other things, shall have regard to the desirability -

(d) of maintaining and promoting the balanced distribution of industry and employment in

the United Kingdom.”

The then MMC (now Competition Commission) in their 1990 Report interpreted this as a

general and not a specific requirement. Consequently, it is nowhere mentioned.

Fair Trading Act 1973, S93 (b)

This section of the Act states:

“(1) If a person furnishes any information-

(a) to the Secretary of State, the Director or the Commission in connection with any of

their functions....under the Competition Act 1980.... And either he knows the information

to be false or misleading in a material particular, he is guilty of an offence.

(2) A person who-

(a) furnishes any information to another which he knows to be false or misleading in a

material particular, or

168

(b) recklessly furnishes any information to another which is false or misleading in a

material particular,

knowing that the information is to be used for the purpose of furnishing information as

mentioned in subsection (1)(a) or (b) of this section, is guilty of an offence.

(3) A person guilty of an offence under subsection (1) or (2) of this section is liable-

(a) on summary conviction, to a fine not exceeding the statutory maximum, and

(b) on conviction on indictment, to imprisonment for a term exceeding two years or to a

fine or to both.”

Competition Act 1980 S 13 (1)

Under S 13 (1) of the Competition Act 1980, the Secretary of State for Trade & Industry has

the power to instruct the DGFT to conduct an investigation into the pricing of a product, in

our case motor fuel. Repeated requests from the Highlands & Islands for such an inquiry

were met with repeated refusals from the DTI to initiate one. In reply to a request from

Duncan MacPherson, then Convener of the now defunct Highland Regional Council (HRC),

Neil Hamilton, then Parliamentary Under-Secretary of State wrote,

“In this connection, [the President of the Board of Trade] is to have regard to whether the

provision of the goods or service in question is of general economic importance and or

consumers are significantly affected”

(Source: Hamilton, Neil (10/5/94) Letter to Duncan MacPherson, London, DTI)

Mr. Hamilton went on to fame, if not fortune in his subsequent career. That is not what

concerns us here, it appears that the Minister concluded that petrol is unimportant to the rural

way of life, and that each motorist paying at least an extra road tax per annum in additional

169

fuel cost did not mean that they were “significantly affected.”

Bryan Carsberg, successor to Gordon Borrie as DGFT described this laissez faire approach as

follows:

“The UK adopts an administrative approach....nothing is prohibited initially but questionable

behaviour can be investigated and prohibited subsequently....I would favour the adoption of

the prohibition approach in the UK.”

(Source: Carsberg, Bryan (24/2/95) Need for unitary competition authority, London, Financial Times)

This provides a vivid contrast with the view of one of Mrs. Thatcher’s truest believers, the

late Nicholas Ridley, who when in charge of the DTI commented that he had:

“Damn all to do and 12,000 people to help me do it”

(Source: quoted in Cole, John (1995), As it seemed to me, London, Weidenfeld & Nicholson, p343)

The only kind of intervention acceptable to this kind of Minister is non-intervention. It is not

surprising to learn that this section of the Act has, in practical terms, been repealed by

desuetude.

Competition Act 1998

The third piece of UK legislation which concerns us is the Competition Act 1998. This act

has been heralded as giving the watchdog, the OFT, more teeth. It is too early to say whether

or not these teeth will be the exercised. What we can say is that it brings UK law on firms

preventing, restricting or distorting competition within the UK in line with EU law on firms

preventing, restricting or distorting competition in more than one member state within the

EU.

There are two basic prohibitions under this Act:

The Chapter 1 prohibition in Section 2 of the Act states:

“2-(1) Subject to section 3, agreements between undertakings, decisions by associations of

undertakings or concerted practices which-

170

(a) may affect trade within the United Kingdom, and

(b) have as their object or effect the prevention, restriction or distortion of competition

within the United Kingdom,

are prohibited unless they are exempt in accordance with the provisions of this Part.

(2) Subsection (1) applies, in particular, to agreements, decisions or practices which-

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development or investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to equivalent transactions with other trading parties,

thereby placing them at a competitive disadvantage;

(e) make the conclusion of contracts subject to acceptance by the other parties, of

supplementary obligations which by their nature or according to commercial usage, have

no connection with the subject of such contracts.”

The Chapter 2 prohibition states, in Section 18 of the Act:

“18-(1) Subject to section 19, any conduct on the part of one or more undertakings which

amounts to the abuse of a dominant position in a market is prohibited if it may affect trade

within the United Kingdom.

(2) Conduct may, in particular, constitute such an abuse if it consists in -

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair

trading conditions;

(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties,

thereby placing them at a competitive disadvantage;

(d) making the conclusion of contracts subject to acceptance by the other parties of

supplementary obligations which, by their nature or according to commercial usage,

171

have no connection with the subject of the contracts.”

(Source: Competition Act 1998, London, The Stationery Office)

European Legislation

European Legislation on competition policy centres on Articles 85 and 86 of the Treaty of

Rome. These have been renumbered following the ratification of the Treaty of Amsterdam as

Articles 81 and 82. The Treaties of Rome and Amsterdam deal with transactions which affect

more than one member state of the European Union. The UK legislation above ensures that

UK law dealing with transactions within the UK is consistent with the law applicable for

transactions involving more than one member state.

Article 85 prohibits as incompatible with the common market:

“All agreements between undertakings, decisions by associations of undertakings and

concerted practices which may affect trade between Member States and which have as their

object or effect the prevention, restriction or distortion of competition within the common

market, and in particular those which:

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development, or investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to similar transactions with other trading parties, thereby

placing them at a competitive disadvantage;

(e) make the conclusion of contracts subject to acceptance by the other parties of

supplementary obligations which, by their nature or according to commercial usage,

have no connection with the subject of such contracts.”

(Source: Rudden, B. & Wyatt, D. (1992) Basic Community Laws, 3rd Edn, Oxford,

Clarendon Press, p48)

The above legislation would appear to strike at the heart of the problems identified with solus

172

ties as presently operated. Unfortunately, this is not the end of the matter. We must also refer

to Regulation (EEC) No 1984/83 of the Commission of 22 June 1983 on the application of

Article 85 (3) of the Treaty to categories of exclusive purchasing agreements (see Rudden, B

& Wyatt, D, op cit, pp 349-360). This regulation is specific in excluding only two long-term

agreements, the first is beer and the second, service stations, thereby letting the oil majors off

the hook. We felt on the last occasion we looked at the provisions that it was unlikely the

Commission was approving the treatment being meted out to businesses such as Norman

Motors (referred to in a previous chapter). We felt that the blanket exemption, without any

means of appeal against the actions of the supplier, and with no provision for arbitration,

went too far. We felt that the contractual abuses identified would continue until a swift

means of settling disputes between the parties to such contracts was established. Such

complaints were passed on to the Commissioner presently responsible for competition policy

by the retailers’ organisation, the PRA. As was explained in page 10 above, the

Commissioner, Mario Monti, on 22nd December 1999 granted an umbrella exemption to oil

companies operating filling station networks which will extend the previous block exemption

in all situations where the oil company has no more than 30% of any national market in the

EU. This will allow the oil companies to carry on regardless of the effect their actions have

had on the independent filling station sector. The PRA through their representative, Ray

Holloway were unsurprisingly and justifiably “disappointed.”

Special Enquiries

Probably no market in the UK has been the subject of more periodic reviews by the Office of

Fair Trading and the MMC than the motor fuel market. In addition to the work which they

have undertaken, the matter has also been pursued by the Trade & Industry Committee of the

Westminster Parliament, The Scottish Office, the various Councils of the Highlands &

173

Islands through their umbrella organisation, HIAG, and as been previously stated is presently

being reviewed by the Enterprise & Lifelong Learning Committee of the Scottish Parliament.

Set out below is a chronology of known investigations.

Chronology of Investigations into the Supply of Petrol

1965 - Report by the Monopolies Commission on the Supply of Petrol to Retailers in the

United Kingdom

1978 - House of Commons Trade & Industry Committee, Second Report, Session 1977-78,

Petrol Retailing

1979 - Report by the MMC on the Supply of Petrol in the United Kingdom by Wholesale

1990 - Report by the MMC on the Supply of Petrol in the United Kingdom by Wholesale

1990 - Report by the DGFT to the Secretary of State for Trade & Industry: “Changes in the

price of petrol in the United Kingdom following the invasion of Kuwait.”

1993 - Unreported investigation by the DGFT into the Supply of Petrol in the UK by

Wholesale

1996 - House of Commons Trade & Industry Committee, Sixth Report, Session 1995-96,

Petrol Retailing

1996 - HIAG, Economic and Social Impact Assessment: Petroleum Prices and Distribution

…… in the Highlands and Islands, Halcrow Fox

1998 - Scottish Office, Central Research Unit, Petrol Stations in Rural Scotland,

Environmental Resources Management (ERM)

1998 - Scottish Office, Central Research Unit, Car Dependence in Rural Scotland, University

of Aberdeen, Farrington et al

1998 - Report by the DGFT, Competition in the Supply of Petrol in the UK

2000 - Highlands & Islands Enterprise & Highland Council, Economic Impacts of Road Fuel

Prices in the Highlands and Islands, EKOS Limited

2000 - DGFT, Enquiry into motor fuel prices in the Highlands & Islands

2000 - Scottish Parliament, Enterprise & Lifelong Learning Committee Inquiry

2011- OFT Price and Choice in Rural Communities – Call for Evidence

2012 - OFT Petrol & Diesel Pricing in the Scottish Islands

2013 - OFT UK Petrol & Diesel Sector an OFT Call for Information

174

It can be seen that as problems with the price of motor fuels have worsened in recent years,

due both to the fuel duty escalator, and due to the widening of the differential earned by the

supply chain in urban as compared with rural areas, the number of studies and their range has

increased.

The 1990 MMC Report “The Supply of Petrol” reached the following main conclusions:

S 1.30, p 5 - a monopoly situation existed in favour of 69 wholesalers

S 1.32, p 5 - the wholesale petrol market is competitive and the general level of prices was

reasonable

S 1.33, p 6 - the companies’ profits on wholesale operations were no more than moderate

S 1.34, p 6 - concentration had reduced since 1979, and wholesalers competed strongly for

solus contracts up for renewal

S 1.35, p 6 - nothing was found which operated against the public interest

The report agreed that:

S 1.38, p 6 - continued monitoring of the industry was necessary

It recommended:

S 1.39, p 7 - that the OFT expand the amount of information which it collected, and keep the

industry under regular review

Trade & Industry Committee (1996) Sixth Report, Petrol Retailing

This Report made eleven recommendations, paraphrased below:

1. The OFT should investigate allegations of discrimination across channels of trade (i.e.

2. Where wholesalers sell on different terms to their own sites and independently owned

sites)

3. Arbitrators should be appointed to deal with contractual disputes and a binding code

of

practice should be established with undertakings being given by both sides to the

Secretary of State for Trade & Industry

3. Continuous monitoring should be conducted by the MMC

4. The powers of the DGFT should be increased

175

5. Duty should be levied when motor fuel leaves storage not the refinery

6. Strategic stock requirements should not distort competition

7. Rack prices should be published

8. OFT should collate statistics on market shares & sales on a regional and national basis

9. Government should consider ways of amending taxes on petrol paid in rural areas

10. OFT should look for evidence of local monopolies

11. Exemption should be granted to rural stations from Stage II of the Petrol [Vapour]

Recovery Directive

In the last version of this book, we wrote “there is little in this excellent report which we

would consider inaccurate.” We also expressed the “hope that the Committee’s

recommendations will not simply be ignored.” Readers will note how little progress has been

made in relation to the recommendations which might have made a difference to the plight of

rural retailers and consumers. Recommendation 9 has certainly been addressed although

perhaps not in the fashion that the DTI Select Committee report’s authors had anticipated!

HIAG’s 1996 Halcrow Fox Report

The report produced for HIAG in 1996 by Halcrow Fox provided an economic and social

impact assessment on petroleum prices and distribution in the Highlands and Islands. The

main findings contained in the report included:

Threatened closure of outlets and the reduction in tourism could lead to the loss of up to

600 FTE jobs in the area;

Almost 40% of filling stations surveyed felt they might have to close due to the Petrol

Recovery Directives;

Consumers in the most remote areas could be faced with an extra £500 on annual fuel

costs if filling station closures took place;

Migration out of the most remote areas would increase if motoring costs increase further

They recommended rate relief for rural filling stations as one of their recommendations. This

176

has been acted upon subsequently by Highland Council. Other recommendations, which

required government action have not been implemented.

Scottish Office (1998) Petrol Stations in Rural Scotland (ERM & Roger Sidaway)

The report compiled by ERM & Roger Sidaway for the Scottish Office suggested a number

of possible measures (Table 11.7a, p 11-10) to secure supply:

Duty Differentials

VAT Differentials

Rate Relief

Petrol Vapour Recovery Stage 1B Derogations

Assistance with Tank Testing

Grant Assistance for Capital Works

Low Interest and Interest Free Loans

Rural Funding Sources (Scottish Office, LEC’s etc.)

Above ground Tanks

Mobile Petrol Stations

Wholesale Petrol Price Reductions

As with the previous report, Local Authorities have done what they can to alleviate the

situation, Central Government has, if anything, made things worse.

Scottish Office (1998) Car Dependence in Rural Scotland (Farrington et al)

In discussing the policy options, the following considerations were highlighted:

Blanket fuel duty increases “would have serious implications for low-income car users,

particularly in remote areas. Such people could in effect be priced out of the

countryside.”

“Lack of alternatives to car use, and the higher fuel prices in rural areas, make fuel price

increases particularly onerous.”

177

Higher rural fuel prices - “Such a pricing pattern does not reflect the view that the

concentrations of atmospheric pollution caused by vehicle emissions are greater in urban

areas.” Suggestions made were:

1. Removal of the Zonal Pricing Policy (operated by oil

companies)

2. Introduction of an Urban Fuel premium (by government)

Vehicle Emission Taxation - would impact hardest on lower income households with

older cars (a regressive tax)

Engine size taxation - should be progressive, wealthier people generally own bigger cars,

less well off people smaller cars. Large families might suffer

Abolition of VED [”Road Tax”] and increased fuel prices - would create difficulties for

remote and low income households

Urban-based measures - “appear to have the potential to reduce urban orientated car use

while retaining the possibility of rural car use for all income groups.

“Hypothecation of revenues for public transport and other improvements would be

important.”

This is again, a thorough report making sensible suggestions which Government has chosen

to ignore.

DGFT (1998) Competition in the Supply of Petrol in the UK

This report covered the entire UK petrol market, it did not consider the diesel market. It

looked in some detail at the position of the Highlands and Islands, and was lobbied by all the

Highlands and Islands Councils, both individually, and collectively through the HIAG group.

It found that the market for petrol in the Highlands and Islands, although separate, was

consistent with the UK market as a whole in being competitive.

Specifically, the OFT found that:

“Higher petrol prices at the pumps in rural areas reflect lower sales volumes,

proportionately higher unit costs and higher costs of distribution.” Page 3

“Most of the 4 to 5 p per litre differential in prices between North West Scotland and the

rest of the UK is accounted for by this, the rest being accounted for by the intense

competition in urban areas.” Page 6

178

“The most striking finding emerging from the independents’ responses is that a clear

majority of independent retailers do not, in the current environment, consider that they

are able to set their own prices.” Page 50

“ The MMC found that wholesalers’ influence over the price of independents was less

than for company-owned sites. This would appear to be less true in the current situation.”

Page 51

“More remote locations may be better able to maintain higher prices.” Page 57

“In terms of volume, the area comprises only 0.24% of the UK market” Page 69

“Almost all the petrol retailers in the region are solus-tie independents and the average

size of petrol station is less than a third of the UK average, with an average annual

throughput in 1997 of only 490,000 litres.” Page 70

“Wholesalers indicated that petrol costs up to 2 p per litre more to supply in North West

Scotland than elsewhere.” Page 71

“The average gross retail margin in North West Scotland was 4.57 p per litre for

unleaded petrol and 4.65 p per litre for leaded petrol in 1996.” Page 72

“Margins at the wholesale level in North West Scotland were also higher than the UK

average” Page 72

“At present, there is no evidence of the operation of cartels in the region but the smaller

number of players and the lower incentive to compete on price, as well as the area’s

isolation from the rest of the UK market, does make for a climate where cartels could

develop.” Page 73

“The OFT does not believe that independent retailers provide any significant benefits for

competition.” Page 100

“We do not believe that any market restructuring which saw independent retailers being

disproportionately affected would necessarily be a cause for concern.”

We should make the following comments on the above:

We would accept that sales volumes are lower, and that unit costs and distribution costs

are proportionately higher. On average in the Highlands, this would explain the price

differential at the retail level (1.95 p per litre for 4-star). This does not mean that

individual sites are not earning excess returns. It means that on average, across the

Highlands & Islands they are not.

According to the OFT, wholesalers earn a gross margin of 2.61 p per litre in the UK. In

the Highlands & Islands they earn 5.02 p per litre. Thus margin in the Highlands &

Islands is 92% more than in the rest of the UK. Only part of this is explained by the extra

cost of delivery of 1 p per litre. The difference is monopoly profit.

179

Wholesalers set retail prices.

Wholesalers set prices for “independent” retailers.

More remote locations allow monopoly profits to be earned by wholesalers

The Highlands & Islands including Argyll & Bute and Moray (the former Euro

constituency) represents 0.93 of 1% of the UK market.

Throughput is at least half of the UK average per site

On average, petrol costs 1p per litre more to supply in the Highlands & Islands.

The low OFT differential figures arose as a result of them choosing the period (Nov ‘96)

with the highest UK margins in 10 months in the case of 4-star, and 15 months in the case

of unleaded. Subsequently, the margin in the month chosen by the OFT was only

exceeded in the case of 4-star in November 1997. The UK unleaded margin had not been

as high again when the OFT stopped collecting the figures in February 1998. High UK

margins will mean low differentials.

Higher margins at the wholesale level could not be explained by cost differences.

Higher wholesale prices and margins (92% higher, even on the OFT’s figures), a limited

number of suppliers with static market share, significant barriers to entry, and a price

structure which NERA calculated was distinct and higher than the rest of the UK does not

constitute a cartel?

What is it?

Independent sites killed by OFT inaction often surrender their volume to oil company

owned sites, supplied by the oil companies with whom the independents competed, or by

whom they were not adequately supported. A more invidious business relationship is hard

to imagine.

Highlands and Islands Enterprise & Highland Council, (2000), “Economic Impacts of

Road Fuel Prices in the Highlands & Islands, Inverness, EKOS Limited

This Report recommended:

“That fuel prices are lowered by reducing the rate of fuel duty paid at fuel stations within

certain parts of the Highlands & Islands. This would be through using a rebate system for

stations to allow lower prices to be charged.”

“That consideration is given to targeting low income households by offering them access

to fuel prices at a discounted rate.”

180

“That there is an explicit policy statement from government regarding the underlying

objectives of the current fuel duty policy and its relationship to other rural/regional

development policies and initiatives.”

“That there is effort placed in developing concepts that would reduce the price of fuel

within the Highlands and Islands, such as new fuel types and mobile filling stations.”

“That more data and research be made available at the Highlands and Islands level to

inform policy developments that affect fuel prices.”

We would not disagree with any of the above recommendations.

Office of Fair Trading (2000) “Petrol and Diesel Pricing in the Highlands & Islands”

This repost was issued just after the publication of our previous edition. The main

conclusions were that there had been:

“no sustained widening of the pump price differential between the H&I and the rest of the

UK.”

“There is no evidence of any excessive profits at the wholesale level but rather evidence in

some areas of short-term loss making.”

“The continued reduction in the number of retailers over the last six years suggests that the

market has been competitive and there is no evidence of any general problem of excessive

pricing or profits.”

With specific regard to the Western Isles however the OFT conceded:

“On the basis of the work carried out in this review it cannot be concluded that the market in

the Western Isles is working competitively. Prices are higher than elsewhere and this cannot

be explained in terms of lower volumes or by what we currently know about costs....It has

been decided, therefore, to undertake a further targeted investigation into this geographic

market.” Source: Office of Fair Trading (July 2000) “Petrol and Diesel Pricing in the Highlands & Islands” OFT305, Page 1

Scottish Parliament, Enterprise and Lifelong Learning Committee

Report on the Inquiry into Fuel Prices in Remoter Rural Areas

The Scottish Parliament’s Enterprise & Lifelong Learning Committee set up a study:

‘To inquire into the pricing of vehicle fuel in remoter rural areas, as it affects local business.

In particular to seek to establish the basis for the higher prices charged by fuel stations in

remoter areas, and to determine whether this is reasonable or not.'

The Committee concluded that there were two main factors affecting the price of fuel in

remoter rural areas:

the additional costs involved in transporting fuel to remote areas, and

181

the lower turnover or throughput of small petrol stations.

The Committee found that the consequences of low turnover were more critical than

transportation costs and more significant to the pricing differential than had at first been

anticipated. It is this factor which partly explains the difference between the remoter areas

and the larger turnover sites in the Central Belt. Nevertheless the pattern of the rural fuel

differential is not uniform across the Highlands and there are significant local variations.

The importance of turnover in the rural fuel price equation was a matter which influenced

the Committee's recommendations.

The Recommendations:

The Committee recognises that although a reduction in fuel excise duty or VAT would narrow

the rural fuel price differential, acceptance of any argument for special treatment of areas of

Scotland is unlikely at UK level or EU level. While there have in the past been some instances

of variable rates of VAT being granted, these have been notable exceptions, for instance as

part of accession agreements in the case of Greece. The SPICe paper on European Fuel

Retailing 00/38 gives further information on this subject, concluding that the current policy

in the EU generally is towards harmonisation of excise and VAT levels. Furthermore there is

no guarantee that a reduction in prices would follow without the ability to regulate prices.

Vehicle Excise Duty reductions or exemptions do offer a more realistic option. Derogation of

Vehicle Excise Duty for HGVs already exists, it is understood, on island-registered lorries

and this could be extended to include private cars. The EKOS study backs this view and

includes analysis of costings and the implications of applying a differential rate of VED for

differential postcode areas. The Committee recommends that as a starting point the

implications of introducing a lower rate of VED for the Islands, on the same basis as

currently exists for HGVs, be examined by the Scottish Executive in consultation with their

colleagues at Westminster.

The use of LSP or LPG or other alternative fuels is something that should be considered as

part of the medium and long term solutions to fuel use. The Committee recognises that :

(a) there needs to be a mechanism to ensure savings are passed on to the motorist;

(b) there is a role for the Scottish Executive in ensuring LSP/LPG is available in the

Highlands and Islands at the pumps and garages; that the possibility for

conversion of cars is made available etc. and that grants should be extended to

older cars.

It is clear from the meetings with the petrol companies that turnover is perhaps a bigger issue

than distance when looking at the cost of fuel at the pumps. There are two possible ways to

182

tackle this. The Committee has an open mind and feels that the oil companies would not be

against either of these suggestions in principle:

(a) Co-operative schemes for bulk buying and supply of fuel. The Committee supports

the extension of the work of Scottish Agricultural Association and local authority

organised schemes to investigate further co-operatives following these models.

(b) The Scottish Executive should examine, with the Petrol Retailers Association and

the Scottish Motor Trade Association, what scope there might be for developing a

rationalised network of supported stations.

183

SUMMARY OF MAIN SUGGESTED SOLUTIONS

REPORT Continued

Monitoring

of Regional /

National

Prices &

Mkt Shares

Arbitrator

for Retailer/

Wholesaler

Disputes

Consider

Lowering

Taxes &/or

paying

Subsidies in

Rural areas

Wholesale

Price

Reductions

And/or Levy

on high vol

sites

Derogation

from Stage

II of Vapour

Recovery

Directive in

Rural areas

Co-operative

Scheme for

Bulk Buying

Fuel

Vehicle

Excise Duty

Reduction in

Remote

Areas

MMC 1990 Yes

Trade &

Industry

Cttee 1996

Yes

Yes

Yes

Yes

Halcrow Fox

1996

Yes Yes Yes Yes

ERM (for

Scottish

Office) 1998

Yes

Yes

Yes

Yes

Farrington

1998

Yes & Hypothecation

for Transport

OFT 1998 Yes

EKOS 2000

Yes

Yes Yes, new

Fuel Types?

OFT 2000 Yes

Scot Parl

Ent&LLCtte

Yes Yes Yes

Table 5.1

184

Conclusions:

A variety of investigations into the UK, the Scottish and the Highlands & Islands markets for

motor fuel have resulted in no action by the regulators (the OFT and the MMC/Competition

Commission) or by the Government to help alleviate the situation faced by rural consumers

and/or independent retailers.

Local Councils have done what their limited powers allow, but they can only affect matters at

the margin. The Government blame the oil companies and/or retailers for the situation. They

look to the OFT to solve the problem. The oil companies blame the retailers for

overcharging, and the Government for the Fuel Duty Escalator. The OFT state the market is

competitive and point out that they are powerless to intervene on social grounds. They think

it is a problem for Government to solve. Quite rightly, the public blame the lot of them.

Some retailers overcharge, there is nothing to stop them doing so. The wholesalers earn much

higher returns, and the OFT refuse to intervene to stop them doing so. Government through

the fuel duty escalator has made matters much worse. The OFT are incapable of recognising

the existence of a cartel. The Councils are powerless to do more than they have done already.

The protection offered by UK legislation to independent retailers and consumers appears

non-existent in reality.

185

6) Environmental Policy & the Fuel Duty Escalator

This chapter deals with environmental problems and with how the Government has set out to

solve them. It will look at the following topics:

UK Environmental Pollution

UK Pollution - Urban and Rural

Present Policies

Future Policy Proposals

Conclusions

UK Environmental Pollution

This section deals with the present state of the environment and the role of the motorist in

causing pollution. We should state at the outset that road transport is the source of a high

proportion of the main pollutants presently affecting the environment. Table 6.1 below shows

the latest figures for pollution attributable to transport from the various pollutants and

the proportion which these represent of total UK emissions of each pollutant.

UK Emissions from Transport

(2010)

In Tonnes

of CO2 Equivalent

Transport as a % of Total

UK Emissions

(by pollutant)

Carbon Monoxide 986.28 46.34%

Nitrogen Oxides 462.21 41.1%

Non Methane Volatile

Organic Compounds

82.44 10.43%

Carbon Dioxide 118,538.24 23.65%

Sulphur Dioxide 17.00 4.07%

Table 6.1 Source:

http://unfccc.int/national_reports/annex_i_ghg_inventories/national_inventories_submissions/items/6598.php

With the exception of Sulphur Dioxide, the Road Transport sector is a significant contributor

to total UK pollution emissions.


186

The graphs on the following pages (figs 6.1 - 6.5) show the pollution attributable to road

transport for each of the pollutants given above for the years 1990 to 2010. It can be seen that

in terms of volume of pollution, the level for each pollutant has fallen significantly over the

period. The UK appears to be making progress towards reduction targets in each case. The

proportion of each pollutant attributable to road transport is shown in a series of pie charts

(figs 6.6 - 6.10) these again highlight the importance of road transport to the overall levels of

pollution in the UK. For all pollutants other than sulphur dioxide, significant reductions in

total UK emissions will only be possible through reductions in pollution from road transport.

The final chart (fig 6.11) shows the steep reduction in the level of lead pollution in the

environment. This reduction is attributable to the switch away from leaded four-star petrol to

unleaded petrol. Such progress in relation to lead should be an encouragement in the belief

that reductions are also possible in other pollutants in the UK.

UK Pollution, Urban and Rural

The Royal Commission on Environmental Pollution made a number of findings which are

worth studying here:

“The ill effects of transport are in general experienced less acutely in deeply rural areas.”

(Royal Commission on Environmental Pollution, (1994) Eighteenth Report

“Transport and the Environment,” London, HMSO, Chapter 11, Page 181)

“Car dependency is even higher in rural than in urban areas and low population densities

make it difficult or impossible to provide adequate substitutes by means of conventional

public transport services,”

(Royal Commission, op cit, Chapter 11, Page 181)

“Fuel consumption is substantially higher in congested urban traffic.”


“Many households, especially in rural areas, have difficulty in affording a car but find they

now need one in order to buy food and obtain employment,”


187

Source: http://uk-air.defra.gov.uk/reports/cat07/1209130947_DA_AQPI_2010_MainBody_v1.pdf

fig (6.1)

http://uk-air.defra.gov.uk/reports/cat07/1209130947_DA_AQPI_2010_MainBody_v1.pdf

188


fig (6.2)


189


fig (6.3)


190

Source: http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-224124

fig (6.4)

http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-224124

191

Source: http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-224124

fig (6.5)


192

Road Transport

42.8%

Other Transport

3.5%

Domestic

18.2%

Energ y

4.6%Industrial Combustion

11.1%

Production Processes

16.1%

Waste Treatment

0.7%

Agric & Forestry

2.6%

Other

0.6%

Ro ad Transpo rt

Oth er Transp ort

Do mestic

En erg y

Indu strial Co mb ustio n

Prod uctio n Processes

Waste T reatment

Ag ric & Forestry

Oth er

Source: Adapted from: http://www.defra.g ov.uk/statis tics/environment/air-q uality/ )

CARBON MONOXIDE EMISSIONSB y S o u rc e 2 0 1 0

fig (6.6)

71.0%

17.0%

5.0%

4.0%

1.0%

1.0%

1.0%

Road Transport

Other Transport

Domestic

Power Stations

Industrial Combustion


Waste Treatment

Source: Adapted form Social Trends (Table 13.6, Page 200)

CARBON MONOXIDE EMISSIONSBy Source 1996

193

fig (6.7)

Industry

24.2%

Other Emissions

0.1%

Military Aircraft

2.3%

Domestic

13.6%

Comm, Public & Ag ric Burning

12.0%

Exports

2.0%

Road Transport

36.3%

Other Transport

9.4%

In d u s try

O th e r E m iss io n s

M ilita ry A irc ra ft

D o me s tic

Co m m , P u b lic & A g ric B u rn in g

E xp o rts

R o a d T ra n sp ort

O th e r T ra n sp ort

Source: Adapted from http://www.defra.g ov.uk/statistics/environment/air-q uality/

NITROGEN OXIDE EMISSIONSB y S o u rc e 2 0 1 0

22.0%

2.0%

3.0%4.0%

2.0%

1.0%

7.0%

47.0%

12.0%

Power Stations

Refineries

Combustion in Fuel Extraction

Domestic

Comm, Public & Agric Burning

Iron & Steel

Other Industrial

Road Transport

Other Transport

Source: Adapted from Social Trends (Table 13.5, Page 199)

NITROGEN OXIDE EMISSIONSBy Source 1996

194

Domestic23.2%

Industry45.9%

Commercial1.3%

Agric1.9%

Road Transport15.4%

Other Transport4.1%

Exports3.7%

Military Aircraft0.4%

Other Sources4.2%

DomesticIndustryCommercial

AgricRoad Transport

Other TransportExports

Military AircraftOther Sources

Sour c e: Adapted fr om: http ://www .defr a.gov .uk /s tatis tic s /env ir onment/a ir - quality /

V O LAT I LE O R G AN IC CO M P O U N D E M IS S IO N SB y S o u rc e 2 0 1 0

fig (6.8)

1.0%

13.0%

14.0%

29.0%

30.0%

6.0%

2.0%

4.0%

1.0%

Domestic

Production

Distiln of Fossil Fuels

Solvent use

Road Transport

Other Transport

Waste Treatment

Forests

Other Sources


VOLATILE ORGANIC COMPOUND EMISSIONSBy Source 1996

195

Industry

38.2%

Military Air & Ship

1.7%

Domestic

26.4%

Comm Public & Agric

15.5%

Exports

4.8%

Road Transport

6.5%

Other Transport

6.7%

Other Sources

0.2%

In d u s try

M ilita ry A ir & S h ip

D o me s tic

Co m m P u b lic & A g ric

E xp o rts



O th e r S o u rc e s

Source: Adapted from http://www.defra.g ov.uk/statistics/environment/air-q uality/

SULPHUR DIOXIDE EMISSIONSB y S o u rc e 2 0 1 0

fig (6.9)

65.0%

6.0%

3.0%3.0%

3.0%

10.0%

5.0%

2.0%

2.0%

1.0%

Power Stations

Refineries

Domestic

Comm Public & Agric

Iron & Steel

Other Industrial

Production

Road Transport

Other Transport

Other Sources


SULPHUR DIOXIDE EMISSIONSBy Source 1996

196

Industry

29.9%

Domestic

18.2%

Comm Public & Agric

20.4%

Exports

0.6%

Road Transport

23.1%

Other Transport

3.2%

Military Air & Ship

0.6%

Other Sources

4.0%

In d u s try

D o me s tic

Co m m P u b lic & A g ric

E xp o rts



M ilita ry A ir & S h ip

O th e r S o u rc e s

Source: Adapted from: http://www.defra.g ov.uk/statis tics/environment/air-q uality/

PARTICULATE EMISSIONSB y S o u rc e 2 0 1 0

fig (6.10)

16.0%

14.0%3.0%

8.0%

28.0%

25.0%

2.0%

3.0%

1.0%

Power Stations

Domestic

Comm Public & Agric

Industrial


Road Transport

Other Transport

Waste Treatment

Other Sources


PARTICULATE EMISSIONSBy Source 1996

197

fig (6.11)

8

8.4

7.9

7.2 7.37.5

6.7 6.8 6.9

7.2

6.5

2.9 3 3.1

2.6

2.22

1.8

1.10.9 0.8

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1995 1996 1997

YEAR

0

1

2

3

4

5

6

7

8

9

LEA

D E

MIS

SIO

NS

(th

ousand tonnes)

LEAD EMISSIONSBY PETROL-ENGINED ROAD VEHICLES

198

2.2

1.9

1.7

1.5

1.3

1

0.9

0.8

0.6

0.3

0.002 0.002 0.002 0.002 0.002 0.002 0.002 0.002 0.002 0.002

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Y E A R

0

0.5

1

1.5

2

2.5L

EA

D E

MIS

SIO

NS

(th

ousan

d to

nn

es)

S o u r c e : A d a p te d f r o m A E A E n e rg y & E n v iro n m e n t , O N S

LEAD EMISSIONSB Y P E T R O L -E N G IN E D R O A D V E H ICL E S

fig (6.11a)

200

“The health-based guidelines for ozone are exceeded on occasions in both urban and rural

areas, particularly in southern Britain....The guidelines for nitrogen dioxide are exceeded on

occasion at urban sites.”


“The critical level specified for nitrogen dioxide is....exceeded regularly in many areas of the

UK, especially in central and southern England and close to large cities.”


There is little above with which we would quibble. The Royal Commission conducted

extensive research and basically arrived at the sensible conclusion that the generation of

pollution is an urban problem. With regard to the Highlands & Islands of Scotland, what

pollution there is has generally arrived from the Central Belt and from coal-fired electricity

generation plant further south. The resulting acid rain has seriously degraded rivers and

lochs. The Highlander is then the victim of pollution by his urban cousin, rather than the

uncaring or unconscious polluter. With one of the lowest population densities in Europe, any

damage by man (short of a Dounreay meltdown) should be relatively easily absorbed by the

environment. If pollution is an urban problem, then policy solutions should seek to adhere to

the principle that the polluter pays. As we shall see below, it is here that the Royal

Commission rather lost their way. We should now look at how present policies are impacting

on urban and rural areas.

Present Policies

EU Policies

The major piece of environmental legislation relating to the sale of motor fuels introduced by

Europe is European Directive 94/63/EC on the recovery of Volatile Organic Compounds

(VOC’s). The best description of the legislation and how it would be implemented was found

in the report by Harry Miller (Director of Environmental Services, Comhairle Nan Eilean

Siar), Miller, Harry (1995) Supply of Petrol and Other Hydrocarbons to the Western Isles,

Lewis, CNE-Siar, Section 7). This paper splits the implementation programme up into its

constituent parts:

201

Vapour Recovery Directive

Operations Covered (By Stage)

Stage 1A Loading to tankers and terminal

operations

Stage 1B Delivery to the service stations

Stage 2 Car refuelling at filling stations

Table 6.2

Source: European Directive 94/63/EC “On the control of volatile organic compound (VOC) emissions resulting

from the storage of petrol and its distribution from terminals to service stations.”

EU Member States were required to implement Stage 1 of the Directive from 31st December

1995, at all outlets with an annual throughput of over 100,000 litres. The Western Isles

Report commented:

“As far as Stage 2 Vapour Recovery is concerned, no firm decisions have yet been taken.”

Since the Western Isles Report was issued in 1995, a further report has been prepared by

ERM for The Scottish Office, Central Research Unit. This provides further information on

the various deadlines for introducing the Directive, and also the derogations presently

Offered. The Report may be summarised as follows:

Stage 1A relates to operations at refineries and at intermediate storage & distribution centres.

It does not relate to the operation of filling stations and is not considered here. We should

however note that the storage depots in the Highlands & Islands do not appear to have the

capability to recover vapour from road tankers used for fuel delivery.

Stage 1B concerns the delivery of fuel to filling stations, and requires vapours in filling

station tanks produced during deliveries by road tanker to be captured by the road tanker &

returned by the road tanker to the storage depot.

Adapted From: Scottish Office (1998) Central Research Unit “A Study of Petrol Stations in

Rural Scotland, Edinburgh, ERM & R. Sidaway, Section 8.8, Pages 8-10 to 8-15.

The timetable for implementation of Stage 1B is set out below:

202

Stage 1B

Vapour Recovery Directive

Filling Station Throughput

Litres per Annum

Implementation

Deadline

> 1,000,000 31 December 1998

500,000 to 1,000,000 31 December 2001

100,000 to 500,000 31 December 2004

<100,000 N/A - Exempt

Table 6.3 Source: Environmental Protection (Prescribed Processes and Substances etc) (Amendment) (Petrol Vapour

Recovery) Regulations 1996 Statutory Instrument 1996, No 2678

We can see from the above that filling stations with a throughput of less than 100,000 litres

per annum have been made exempt from the provisions.

In addition to the above exemption, the Scottish Office Report states that:

“The Directive allows Member States to apply for a derogation for stations with an annual

throughput of between 100,000 and 500,000 litres if they are located in a geographic area

where vapour emissions are unlikely to contribute significantly to environmental or health

problems.”

Source: Scottish Office (1998) op cit, Pages 8-11 and 8-12

This derogation applies to new sites throughout the Highlands & Islands which fall into this

category of throughput and are 30mins drive from Inverness. The report further comments:

“A similar derogation will be considered for existing stations before the regulations are due

to take effect for outlets of this size in 2004.”

Source: Scottish Office (1998) op cit, Page 8-12.

Stage 2 Implementation - Directive 2009/126/EC

Stage 2 implementation involves installing equipment to reduce vapour emissions during

refuelling of motor vehicles. This is a much more expensive business than Stage 1B above.

The costs of implementing Stage 2 might be anything from £40,000 to £60,000 per site (see

Petter, C K B, (1995) The Future of Rural Filling Stations, Rugby, PRA). Derogations were

introduced to protect low volume filling stations at Stage 2. The Directive comments that:

203

“Member States shall ensure that any new service station shall be equipped with a Stage II

petrol vapour recovery system if....its actual or intended throughput is greater than 500 m 3

/year.”

There have been a succession of Directives covering motor fuel emissions. A chronology of

these is provided below:

EC Directives on Motor vehicle Emissions And Air Quality

Directive 70/220/EEC Directive relating to measures to be taken against air pollution

by gases from positive ignition engines of motor vehicles.

Directive 77/143/EEC Directive on the approximation of the laws of the member

states relating to road worthiness tests for motor vehicles and

their trailers (exhaust emissions).

Directive 80/779/EEC Directive on air quality limit values and guide values for

sulphur dioxide and suspended particulates.

Directive 82/884/EEC Directive on a limit value for the lead in air.

Directive 85/203/EEC Directive on air quality standards for nitrogen dioxide.

Directive 88/77/EEC Directive on emission of gaseous pollutants from diesel lorries

and buses.

Directive 91/41/EEC Euro 1 emission limits for cars

Directive 92/72/EEC Directive on air pollution by ozone

Directive 93/12/EEC Directive relating to the sulphur content of liquid fuels.

Directive 94/12/EC Euro 2 emission limits for cars

Directive 94/83/EC Directive on the control of volatile organic compounds.


Directive 98/70/EC Directive phasing out leaded petrol & reducing sulphur &

benzene content in petrol.

Directive 1999/32/EC Directive reducing the sulphur content of liquid fuels


Directive 2003/30/EC Directive on the promotion of the use of biofuels or other

renewable fuels for transport

Regulation (EC) No 715/2007 Regulation on type approval of motor vehicles with respect to

emissions Euro 5 and Euro 6 limits for cars

Directive 2008/50/EC Directive on ambient air quality and cleaner air for Europe

Directive 2009/28/EC

Directive on the promotion of the use of energy from

renewable sources and amending and subsequently repealing

Directives 2001/77/EC and 2003/30/EC

Directive 2009/30/EC

Directive amending Directive 98/70/EC as regards the

specification of petrol, diesel and gas-oil and introducing a

mechanism to monitor and reduce greenhouse gas emissions

and amending Council Directive 1999/32/EC as regards the

specification of fuel used by inland waterway vessels and

repealing Directive 93/12/EEC

Directive 2009/126/EC Directive on Stage II petrol vapour recovery during refuelling

of motor vehicles at service stations

Directive 2012/33/EU Amending Council Directive 1999/32/EC as regards the

sulphur content of marine fuels

Table 6.4 Source: http://eur-lex.europa.eu/en/index.htm

http://eur-lex.europa.eu/en/index.htm

204

As part of their work in this area, the European Commission has set out limits for pollution

from motor vehicles which have been declining in stages. The Euro 3 limits on emissions

came into effect in 2000 for new vehicle models and in 2001 for all new vehicles including

existing models. Euro 4 limits replaced these in 2005 with a further reduction taking place

with Euro 5 in 2009. A further revision to Euro 6 limits is due in 2014.

European emission standards for passenger cars (g/km)

Tier Date CO THC NMHC NOx HC+NOx PM P***

Diesel

Euro 1† July 1992 2.72 (3.16) - - - 0.97 (1.13) 0.14 (0.18) -

Euro 2 January 1996 1.0 - - - 0.7 0.08 -

Euro 3 January 2000 0.64 - - 0.50 0.56 0.05 -

Euro 4 January 2005 0.50 - - 0.25 0.30 0.025 -

Euro 5 September 2009 0.50 - - 0.180 0.230 0.005 -

Euro 6 (future) September 2014 0.50 - - 0.080 0.170 0.005 -

Petrol (Gasoline)

Euro 1† July 1992 2.72 (3.16) - - - 0.97 (1.13) - -

Euro 2 January 1996 2.2 - - - 0.5 - -

Euro 3 January 2000 2.3 0.20 - 0.15 - - -

Euro 4 January 2005 1.0 0.10 - 0.08 - - -

Euro 5 September 2009 1.0 0.10 0.068 0.060 - 0.005** -

Euro 6 (future) September 2014 1.0 0.10 0.068 0.060 - 0.005** -

* Before Euro 5, passenger vehicles > 2500 kg were type approved as light commercial vehicles N1-I

** Applies only to vehicles with direct injection engines

*** A number standard is to be defined as soon as possible and at the latest upon entry into force of Euro 6

† Values in brackets are conformity of production (COP) limits

Table 6.5 Source: http://en.wikipedia.org/wiki/European_emission_standards

In addition to the various EU measures referred to above, the UK also imposes regulations on

filling stations, the most important for our study being that on tank testing. Testing is now

required for all tanks when 20, 25 and 30 years old, and biannually thereafter.

Source: House of Commons Select Committee on Trade & Industry, op cit, Page xix.

Halcrow Fox estimated the cost of this testing at up to £500 per tank.

Source: Halcrow Fox, op cit, Page 3

Filling Stations have in the past been subject to Health & Safety Guidelines number 41,

Construction and Operation of Filling Stations. This regime has however been replaced with

one based on risk assessment. Given the age of motor fuel tanks in the Highlands & Islands,

http://en.wikipedia.org/wiki/Automobile

http://en.wikipedia.org/wiki/Carbon_monoxide

http://en.wikipedia.org/wiki/Hydrocarbon

http://en.wikipedia.org/wiki/Non-methane_hydrocarbons

http://en.wikipedia.org/wiki/Nitrogen_oxides

http://en.wikipedia.org/wiki/Hydrocarbon

http://en.wikipedia.org/wiki/Nitrogen_oxides

http://en.wikipedia.org/wiki/Atmospheric_particulate_matter

http://en.wikipedia.org/wiki/Particle_number

http://en.wikipedia.org/wiki/Light_commercial_vehicle

http://en.wikipedia.org/w/index.php?title=Conformity_of_production&action=edit&redlink=1

http://en.wikipedia.org/wiki/European_emission_standards

205

we must assume that many filling stations will fall into the high risk category, and the

considerable expenditure required will mean that where costs are not met under the (now

closed) Scottish Executive’s Rural Petrol Station Grants Scheme, sites will close.

Source: see (1) Petter, C K B, op cit and (2) Scottish Executive leaflet “Rural Petrol Stations Scheme”.

Present UK policy on motor fuels cannot be discussed without reference being made to the

Fuel Duty Escalator. This policy was introduced by the Tory Chancellor Norman Lamont in

response to the Royal Commission on Environmental Pollution’s Eighteenth Report, (1994)

Transport and the Environment, London, HMSO (Cm 2674).

Their analysis sought to provide policy solutions for Government which would reflect the

concern which the public feel over environmental issues. The biggest problem they faced in

doing so was not technical or technological, but rather economic. They had to decide who

should pay. The general economic principle to be applied in such circumstances is that of

ensuring that the polluter pays. We should consider their recommendations in light of this

criterion.

In the search for the Best Practicable Environmental Option (BPEO), the Royal Commission

having weighed the evidence, opted for the Best Politically Expedient Option. Rather than

the urban polluter paying for the cleanup, the long suffering rural motorist was called upon

to pick up a disproportionately large share of the tab. It is not too much to claim that some of

their ideas amounted to social engineering. The Royal Commission identified pollution as an

urban problem. It could see that rural areas are poorly provided for in terms of public

transport, it recognised that road pricing, one of the alternative methods of controlling

pollution looked at could be targeted at the worst affected inner-city areas. In light of these

findings, it might have been anticipated that city centre motorists travelling on their own in

the rush hour might make a sensible target. With breathtaking complacency the Royal

Commission ignored the history of transport policy since 1979 and remarked:

206

“In this perspective on transport policy, the emphasis is on the role of the community in

ensuring through collective action that an attractive and comprehensive system of public

transport is available.” Source: Royal Commission (1994) op cit, Page 89

We consider that this is a bit like saying:

“Assuming that bus deregulation and railway privatisation had never occurred, then the

solution is as follows....”

The public’s sceptical view of economists could hardly be better justified than by flights of

fancy like this. Whilst we would find it easy to be critical of the Royal Commission, perhaps

our judgement should not be so harsh, a committee who never made it north of Strathclyde

but who did find the time to visit: The Hague, Utrecht, Delft, Tokyo, Los Angeles, Portland,

Washington DC, Stockholm, Oslo, Zurich, Paris, Grenoble and Lyon were possibly out of the

country for most of the last twenty-one years, or so jet-lagged on their return that they slept

through the whole process. In any case, they concluded that what was needed was a doubling

in fuel prices over ten years. They accepted that in areas such as the Highlands & Islands

people would suffer as they travel greater distances and are more reliant on their cars due to

the unavailability of public transport. The conclusions they reached, and the solutions which

they proposed to counter this problem were bizarre:

“The density of the population and the pattern of development are important in determining

whether traffic flows are sufficiently large to make any form of public transport cost-

effective.” Source: Royal Commission (1994) op cit, Page 93

“In denser areas there is greater use of public transport....in less dense areas there is more

car use.... One way of reducing the distances that people need to travel is by increasing the

densities but this may not be sufficient to reduce travel demand.” Source: Royal Commission (1994) op cit, Page 149

“The compact centralised city emerges as one potentially transport-efficient pattern of urban

development.” Source: Royal Commission (1994) op cit, Page 149

What happened to the polluter pays principle?

207

Clearly this had been abandoned by the Royal Commission, who recognised the potential for

some motorists to suffer unfairly as a result of their proposal to double fuel taxation over ten

years:

“Even if other taxes are reduced to balance the increases in fuel duty, there will be a

significant adverse effect on some motorists if they are heavily dependent on using a car,

have low incomes, and cannot adapt to the circumstances over the ten years in which

increases in fuel duty will be taking effect.” Source: Royal Commission (1994) op cit, Page 118

Welcome to the Highlands.....

Transport costs can be up to 15% of total costs for some Highlands & Islands firms. The

imposition of the fuel duty escalator without any consideration for the difficulties it has

caused in remote and rural areas hit home with a vengeance. Those living and working in the

countryside are being forced to consider moving to more central locations, denuding country

towns of jobs and working-age people. As a consequence, city centres will become more

and not less crowded. This has to be the worst possible environmental option. The measure

succeeded in raising huge amounts of revenue for the Government and only very belatedly

affected the levels of fuel being sold. The only sensible solution to the problems of pollution

and congestion would have been to target urban areas through road pricing and parking

charges. This was rejected as the political costs were considered too great to bear.

Why people in the Highlands & Islands living in an unpolluted rural idyll should be forced to

subsidise polluting city motorists is beyond the comprehension of the population living here.

It is a further reflection of political attitudes towards rural communities which are found in

the contrast between the population of Greater London not paying tolls for using or widening

of the M25 or the Channel Tunnel, but the population of Skye being initially expected to

cover the cost of construction of a £20 Million bridge, a notion subsequently abandoned.

Before considering future policy proposals, we should look at the evidence on the

applicability of present policies to solving environmental problems. Firstly, what are the

208

problems?

We have seen earlier in this Chapter that the road transport sector is a significant contributor

to most of the major pollutants. The following diagrams (figs 6.12 & 6.13) show that the

concentrations of pollutants found in the North West Highlands & Islands of Scotland are the

lowest in the UK and very much lower than those found elsewhere. It will be apparent from

this, that the present Government policy of targeting fuel duty as a means of reducing

pollution will impact financially most heavily on the areas least polluted due to higher

mileages being driven in remote & rural areas. Conversely, they will have the least impact on

motorists travelling by car in urban areas where pollution and congestion are at their highest.

Various other parties have attempted an analysis of pollution and congestion levels & taxes

and their consequences in urban and rural areas. We should now review their findings.

209

http://www.nationalarchives.gov.uk/doc/open-government-licence/version/2/

Fig 6.12


210


Fig 6.13 Source: Diagrams from

http://www.transportscotland.gov.uk/strategy-and-research/publications-and-consultations/j210731-08.htm#


http://www.transportscotland.gov.uk/strategy-and-research/publications-and-consultations/j210731-08.htm

211

CSERGE - Blueprint 5 The True Costs of Road Transport

This study set out to analyse the total cost of road travel, looking at both the private cost and

also at the social cost. They found in relation to increases in fuel duty that:

“The regional incidence of road fuel tax increases suggested other concerns, with a

disproportionate burden of the tax falling upon isolated rural communities.”

Source: David Maddison, Pearce, D., Johansson, O., Calthrop, E., Litman, T., Verhoef, E., (1996) Blueprint 5

The True Costs of Road Transport, London, Earthscan/CSERGE, Page 47.

They also found:

“The damage caused by emissions, however, depends strongly upon location in a way which

fuel taxes cannot reflect. Rural car drivers will be needlessly penalised by a system which

increases the price of fuel on which they are dependent through an absence of public

transport alternatives.” Source: David Maddison, Pearce, D., et al (1996) op cit, Page 78.

“It is apparent that the two main taxes currently imposed upon road transport [fuel duty and

Vehicle Excise Duty] almost totally fail to confront road users with the marginal external

costs of their journeys.” Source: David Maddison, Pearce, D., et al (1996) op cit, Page 146.

“The Royal Commission’s proposal to increase the price of a gallon of petrol to £5 would

therefore do extraordinarily little to tackle the majority of the environmental problems

associated with road transport.” Source: David Maddison, Pearce, D., et al (1996) op cit, Page 147.

This reflects a pretty damning conclusion that congestion in urban areas is the major

problem, and that it is not one that can be solved by increasing rates of fuel duty.

This study also referred to the work of our next contributor.

Newbery’s Analysis

Professor David Newbery of the Department of Applied Economics at the University of

Cambridge is quoted in the CSERGE book referred to above. Newbery set out to analyse the

marginal external costs of congestion in the UK, looking at a variety of road types and times

of day. He found as follows:

212

Table 6.6 Source: Adapted from: Newbery, David (1992) Economic Principles Relevant to Pricing Roads, Oxford,

Oxford Review of Economic Policy, 6(2). Cited in David Maddison, Pearce, D., et al (1996) op cit, Page 111.

This study provides the clearest possible evidence that the concentration on fuel duty to

ameliorate environmental problems is wrong-headed. It shows conclusively that if we seek to

internalise the external costs associated with road transport, we must do so on the basis of

controlling urban congestion. External Costs in rural areas are a fraction of one percent of

those found in urban areas. The escalator policy is illogical & its long continuance was cruel.

Institute for Fiscal Studies - The Distributional Effects of Taxes on Private Motoring

This study found that:

“The use of road fuel, however, is not closely linked with other social costs such as

congestion and other air pollutants, and so road fuel duty would be a blunt instrument with

which to tackle these problems.”

Source: Laura Blow & Crawford, Ian (1997) The Distributional Effects of Taxes on Private Motoring, London,

Institute for Fiscal Studies, Page 1.

They also commented:

“Rural dwellers may have little access to reliable public transport, and therefore little short-

term alternative to their car for travel purposes. In the longer term, people can change their

circumstances, and we could even see relocation in response to increases in motor travel

costs, to reduce the distance from home to work and amenities or to increase access to public

transport.

Fuel taxes affect the cost of all journeys and so do not effectively address congestion costs” Source: Laura Blow & Crawford, Ian (1997) op cit, Page 24.

Again, there is no support from this study for the fuel duty escalator.

Scottish Consumer Council - Sustainable Transport Policy and people living in Rural areas

This study was undertaken by the University of Aberdeen for the Scottish Consumer Council.

Congestion in the UK

Marginal External Costs

(1990 Prices)

Road Type & Time of Use Marginal External Cost

Of Congestion

(pence per vehicle km)

Urban Central (peak) 36.37

Urban Central (off peak) 29.23

Rural Dual Carriageway 0.08

Other Rural 0.05

213

It found the following:

“The RCEP recommended large scale fuel price rises and other mechanisms such as vehicle

taxation based on fuel consumption to give car users and manufacturers clear signals which

would fundamentally affect their behaviour. Perhaps the biggest problem facing rural car

users in Scotland is that they would be expected to pay the cost of these ‘signals’ while the

problems being addressed are largely urban. Rural car use generally does not cause

congestion, and the level of emissions reached in most rural areas does not give cause for

medical concern.” Source: John Farrington, Collins, B., Coole, N., (1996) Sustainable Transport Policy and People Living in Rural

Areas, Page 19.

This study also highlighted the fact that incomes in Rural Scotland are lower than those

found on average in Scotland, which are in turn lower than the UK average. It found no case

to support the fuel duty escalator.

Peter Mumford: The Road From Inequity: Fairer ways of Paying the True Costs of Road Use

The above publication by Peter Mumford was published by the Adam Smith Institute. It

provided an updated version of the Newbery analysis given above.

A table with the findings relevant to our analysis is given below:

Congestion in the UK

Marginal External Costs

(1990 Prices)

Road Type & Time of Use Marginal External Cost

of Congestion

(pence per vehicle km)

Urban Central (peak) 43.40

Urban Central (off peak) 33.30

Rural 0.87

Table 6.7 Source: Adapted from Mumford, Peter (2000) The Road From Inequity: Fairer ways of paying the true costs of

road use, London, Adam Smith Institute, Page 10.

Mumford drew a number of conclusions from his analysis:

“Urban road users are paying too little in relation to the costs they impose and rural road

users are paying a far greater amount than would be justified by the social costs created.”

“The average taxation paid in excess of government road expenditure was £26 billion,

equivalent to 5.6 pence per kilometre in 1999. On that basis, rural road users were

overcharged 4.81 pence per kilometre driven....whereas urban central peak users were

undercharged 37.8 pence.”

214

“Rural road users currently pay nearly seven times too much in terms of excess taxation

when compared with the social costs they create. Consequently they appear to be subsidising

urban road users who are creating social costs between two and eight times the level of

taxation they pay.” Source: all quotes from: Mumford, Peter (2000) op cit, Page 10.

Mumford ‘s conclusion was also that the present system was iniquitous.

Congestion Charging in London

Only one big city in the UK has introduced a Congestion Charge. That city is London where

congestion was at its worst. On 17th

February 2003 the Mayor of London, Ken Livingstone,

was pleased to see its introduction turn out to be better than expected. A BBC report on the

tenth anniversary of the introduction of the scheme quoted Livingstone’s assessment of why

so few other cities have followed his lead:

“political cowardice is always going to be a problem: people think they might lose votes if

they do it – but very few cities actually need it.” Source: http://www.bbc.co.uk/news/uk-england-london-21451245

Ken Livingstone’s view is that modern cities have been built with vehicular traffic in mind.

Congestion in his view is mostly a problem in older cities which pre-date the car.

Boris Johnson has praised his predecessor for the introduction of a scheme which has been of

benefit to London. Boris didn’t expand the scheme into a western expansion zone in 2010.

Both are agreed that tackling pollution is a major health issue for London. Livingston is

quoted as saying:

“We’ve all woken up to the fact that in London over 4,000 people die prematurely every year

because of the air quality – that’s worse than 9/11” Source: http://www.bbc.co.uk/news/uk-england-london-21451245

Johnson has responded to the problem by promoting the introduction of an Ultra Low

Emission Zone for central London by 2020. Durham is the only other city in the UK to have

introduced a congestion charge.

Future Policy Proposals

We should start our search for future policies by looking at what has worked in the present

environmental policy portfolio. We looked initially in the previous section at European

http://www.bbc.co.uk/news/uk-england-london-21451245


215

Directives. These have set out limits which have reduced over time for a number of major

pollutants. It would be churlish not to concede that these have proved effective in terms of

reducing pollution. Initially this was achieved without much of a price increase (net of duty

and taxes). In recent years however the amount net of duty and taxes has risen sharply as the

supply chain and fuel trading houses rapidly increased their income.

In addition to the above Directives targeted at oil refiners, the European Commission has

secured voluntary agreements from motor vehicle manufacturers which have improved the

fuel efficiency of newly manufactured vehicles.

These policy achievements by the Commission are little known. Coverage of them in the UK

media is in inverse relation to that given to their much publicised attempts to reduce the noise

levels of lawnmowers. We would suggest that the Commission’s achievements in reducing

emission levels from motor fuels, and in lowering engine pollution are worthy of column

inches in the popular press, but would hope that the Commission don’t attempt to hold their

breath in anticipation of the situation changing.

Moving on to what hasn’t worked, we come to the fuel duty escalator. It will be obvious that

even the most ardent environmentalist would concede that this has targeted rural areas at the

expense of urban ones. We have seen demonstrated above that there is no case which can be

made to support this tax. It has no environmental legitimacy as it fails to tackle congestion,

and the much higher levels of pollution found in urban areas. In terms of social inclusion it

has alienated rural communities. It is regressive, impacting most heavily on low paid

motorists “strivers” travelling long distances to work. It makes rural business less able to

compete with and/or supply to urban business, affecting agriculture, manufacturing and

tourism particularly badly. It destroys the international competitiveness of UK firms by

imposing costs not faced by US, and in this situation more importantly EU businesses. Its aim

216

was to reduce the levels of motor fuels bought in the UK. Total fuel sales peaked in 2007 and

have fallen in subsequent years. This is due to more fuel efficient cars travelling lower

average miles per annum than in the past. It has spectacularly raised tax revenue for

successive Governments which have failed to reinvest this either in providing better public

transport facilities, or in making any serious attempt at switching to clean carbon free fuels or

in developing carbon sinks to soak up atmospheric pollution.

What then must we do to improve the state of our environment in the future?

Firstly, the European Commission should be commended for successive and successful

reductions in the levels of pollutants in motor fuels. The Stage VI limits being introduced

next year (2014) will further improve the environment. Stage VI should be given every

support and encouragement.

Further improvements should be made to engine emission limits, again reducing pollution

most effectively and most cost effectively at source. We must also look at proposals

contained in the various studies already referred to above which seek to tackle pollution and

urban congestion, the other major external cost of road transportation.

The Royal Commission on Environmental Pollution, Twenty-second Report, Energy - The

Changing Climate, was a significant contribution to the debate. This report welcomed and

encouraged the measures being taken at a European level referred to above, and made the

following comments on Government policy initiatives:

“The Government’s draft Climate Change Programme includes a reduction in carbon dioxide

emissions of up to 3.3 MtC a year below ‘business as usual’ levels in 2010 based on

implementing integrated transport policies set out in the Transport White Paper. Every urban

local authority would have to introduce road pricing....and/or workplace car parking

charges. There would also be tolls on the most congested 4% (by length) of inter-urban

motorways and A roads....The real cost of fuel duty would rise by 19% between 1999 and

2010.” Source: Royal Commission on Environmental Pollution (2000) Twenty-second Report, Energy the Changing

Climate, Norwich, The Stationery Office, Cm 4749, Page 111.

“We urge a wide differential in VED between the highest and lowest bands and an increase in

the number of bands or a sliding scale. We endorse the House of Commons Environment,

217

Transport and Regional Affairs Committee’s proposal for a revenue-neutral graduated

purchase tax on new cars, with a subsidy for low emission vehicles financed by tax on high

emission vehicles.” Royal Commission (2000) op cit, Page 111.

“It is crucial that manufacturers comply with the agreements negotiated with the European

Commission on reducing carbon dioxide emissions from new cars; and that, if they do not,

mandatory standards are introduced quickly.” Royal Commission (2000) op cit, Page 112.

“We welcome the Transport White Paper....But we continue to be disappointed by the slow

progress in implementing the measures required and the delay in introducing the necessary

legislation.” Royal Commission (2000) op cit, Page 112.

“We particularly regret that successive governments have not devoted more of the revenues

from the fuel duty escalator to improving alternatives to car use. We welcome the recent

increases in investment in public transport and hope these will be further enhanced.” Royal Commission (2000) op cit, Page 112.

“We urge the government to do all it can through the EU to ensure further substantial

reductions in carbon dioxide emissions from vehicles for the period beyond 2008.” Royal Commission (2000) op cit, Page 112.

The Royal Commission also comment on the climate change levy which the Government

intend to introduce in April 2001 on users of gas coal & electricity outside of the household

sector. They see this as a step on the way to an all-encompassing carbon tax.

“If the climate change levy is to be introduced, it should be seen as an intermediate stage in

the introduction of a carbon tax.” Royal Commission (2000) op cit, Page 118.

“A carbon tax would be applied upstream, and should cover all fuels including transport

fuels and all sectors.” Royal Commission (2000) op cit, Page 118.

In short, the Royal Commission would recommend Government introduce a further tax on

motoring as part of a new, wider carbon tax. There is no mention of the ability of the rural

environment to absorb carbon dioxide emissions, and we can only assume that, having learnt

nothing from the fuel tax escalator they propose a blanket carbon tax on energy use for road

transport which would again impact most heavily on the least polluting rural areas.

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CSERGE - Blueprint 5

CSERGE made a number of comments as to the most appropriate way of tackling pollution

and congestion. Many of these have been acted upon, others have not. As with the RCEP

above, they advocate a carbon tax rather than the tax on motor fuels which the fuel duty

escalator represents. Existing fuel duties should reward cleaner fuels with lower rates of duty

and penalise dirtier fuels with higher rates. They would support the need for VED to:

“reflect the emissions characteristics of the vehicle.” Source: David Maddison, Pearce, D., et al (1996) op cit, Page 148.

They also comment that:

“Open access to the urban central road network must cease; the resultant congestion is

extremely wasteful and the increase in pollution levels from lower speeds and stop-start

driving conditions is highly significant....some means of rationing demand must be

implemented. There are overwhelming arguments in favour of electronic distance charging

but this is an option which is likely to be a long time coming. In the short term the best option

is probably an area licensing system which requires motorists to possess a licence to drive in

a certain area.” Source: David Maddison, Pearce, D., et al (1996) op cit, Page 149.

The CSERGE group would allow licences to be suspended during weather-induced pollution

crises.

Institute for Fiscal Studies - The Distributional Effects of Taxes on Private Motoring

This study concluded that:

“In principle, policy should be aimed at charging for the social costs of pollution as directly

as possible. Unfortunately, an appropriate tax base may be hard to find, since direct

measurement of emissions is impractical. Carbon dioxide is an exception, and congestion

also might be more amenable to charging, particularly with the emergence of increasingly

sophisticated electronic charging systems.” Source: Laura Blow & Crawford, Ian (1997) op cit, Page 51.

Scottish Consumer Council - Cars and the Environment a Policy Paper

This paper was produced by the University of Aberdeen team which also produced

“Sustainable Transport Policy and people living in Rural areas.” It made a series of

recommendations:

219

“The doubling of fuel prices as proposed by the RCEP, the taxing of emissions based on

annual car mileage, and steeply graded fuel consumption-based vehicle excise duty,

should be opposed on the following grounds.

They would be regressive, causing hardship to those on low incomes and rural

dwellers heavily dependent on car use. Public transport is often not a viable

alternative.

They would cause car down-sizing and consequently probable higher casualty rates

among car users.

Alternative ways of securing fuel economy improvements are available, for example,

fuel efficiency taxing based on car engine size bands, and legislation governing fuel

efficiency, applied to manufacturers.

There is an urgent need for a comprehensive and systematic research programme to

identify the social, economic, and environmental impacts of the RCEP’s

recommendations in a range of combinations.

Detailed work is needed to evaluate the possibility of setting up regional transport

authorities or a Scottish transport authority.

Policies should focus on air quality management in urban centres.

Focusing policies on air quality management in urban centres would be useful in

achieving the best mix of measures such as park and ride, bus lanes, car parking

charges and traffic restraint for each urban centre....This would tackle the problems

of congestion and the concentration of harmful emissions. The wider problem of CO2

emissions would also be tackled by these measures.

Revenue raised should, at least in part, be allocated to measures which promote a

sustainable transport system. Source: John Farrington, Collins, B., & Coole, N., (1996a) Cars and the Environment a Policy Paper, Scottish

Consumer Council, Pages 37-38.

Peter Mumford: The Road From Inequity: Fairer Ways of Paying the True Costs of Road Use

Mumford assessed present taxation policies on road transport as follows:

Road users are highly differentiated by where, when and what they drive in terms of the

social costs they create;

Rural road users currently pay significantly more than the costs of supplying and

maintaining roads and the costs they impose on society; and

Urban road users, especially at peak times are presently paying less than is justified by

the social costs they create.

He concluded that:

“Since most of the social cost occurs in an urban setting, urban road pricing would offer

several benefits:

A reduction in the level of congestion in urban centres would reduce business costs,

shorten journey times, and increase the reliability and predictability of bus and private

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car journeys;

The reduction in traffic flow and the resulting increase in vehicle speed would reduce the

damage done by vehicle exhaust fumes on human health; and

A correction of the current imbalance between rural and urban road user payments.

Because it properly reflects the various social costs that we have identified above, road

pricing can be presented as a fair, revenue-neutral solution to tackling congestion and

reducing pollution. The revenue contribution of urban and rural road users would be more

fairly distributed. Urban charges could be set at a level that reflected the economic damage

of congestion and other social costs caused by urban road users.” Source: Mumford, Peter (2000) op cit, Page 13.

Other studies have also identified congestion charging through road pricing as a solution to

the environmental difficulties caused by road transport. These include:

Michael Schabas: Charging for Roads A better way to ease congestion

This study was also in favour of road pricing. It commented:

“The use of cars, especially in the centres of major cities, imposes significant external costs

as the result of congestion, noise, and pollution which are borne by city dwellers generally. If

motorists faced charges reflecting these costs severe traffic congestion should become a thing

of the past. Motorists would have an incentive to treat road space as a scarce commodity and

to use it more sparingly. Less important journeys would be shifted to the off-peak, made by

public transport, combined with other journeys, or simply not made.” Source: Schabas, Michael (1995) Charging for Roads: A better way to ease congestion, London, Centre for

Policy Studies, Page 5.

Schabas suggested banded road use charges rather than electronic tolls or fuel duty as being

the best way to make urban polluters pay for the social cost of their activities.

Institute of Economic Affairs: Road Pricing

The Journal of the Institute of Economic Affairs, “Economic Affairs” in December of 1998

devoted considerable attention to the issue of road pricing:

In the Editorial article John Hibbs commented:

“If road pricing, then, could be set so as to reflect the actual scarcity value of sections of

road at various times and places....congestion would, by definition, have disappeared.” Source: Hibbs, John (1998) Editorial: a radical approach, Economic Affairs, Vol 18, No 4, Pages 3-4.

His article stressed the need for improved bus services to provide an attractive alternative to

car travel. He praised the introduction of ‘quality partnerships’ between bus companies and

local authorities and welcomed improved bus design and Kerb-guided buses.

221

Alan Day commented:

“In general, this road charge on the individual user should be related to the marginal costs

imposed on the rest of society - highest in congested conditions, lower in uncongested

conditions but still calculated to cover pollution, noise, accident and road repair costs.” Source: Day, Alan (1998) The case for road pricing, Economic Affairs, Vol 18, No 4, Page 6.

Stephen Ison contributed:

“One measure politicians have shied away from, but which offers a powerful means of

tackling the problem, is urban road pricing....The situation may have to get a great deal

worse before urban road pricing is implemented in a UK setting. A major prerequisite is

therefore one of ‘political will.’” Source: Ison, Stephen (1998) The saleability of urban road pricing, Economic Affairs, Vol 18, No 4, Pages 24-

25.

Our final contribution is taken from the article by David Bayliss in Economic Affairs. He

commented:

“The only really effective policy to tackle highway congestion is direct charging for the use of

congested roads.” Source: Bayliss, David (1998) Road Pricing and the new deal for transport, Economic Affairs, Vol 18, No 4,

Page 30.

All of the above contributors support the idea of charging for environmental pollution and

congestion caused by road transport through the introduction of urban road pricing.

We have seen what is almost a one handed economic opinion that urban motorists are being

undercharged for the congestion element of their activities, and agreement that congestion

causes increased pollution. Tackling congestion through un-targeted increases in motor fuel

duty will not, and have not, it is accepted reduce congestion.

Equally, we have seen that rural motorists are, it is accepted, being forced to pay for pollution

and congestion at a cost far beyond any damage which they impose on society.

The diagrams below illustrate the present position.

Further studies have been undertaken in recent years. A major study was undertaken by

Wood Mackenzie (2009) “UK Downstream Oil Infrastructure” which looked at the

downstream infrastructure in the UK and how it had developed over time.

222

Main Findings:

The economic downturn will lead to weaker oil demand

•The decline in gasoline demand will accelerate

•The upward trends in diesel and jet fuel demand will be interrupted

Once the economy returns to growth, the previous trends will tend to reassert themselves

although there are a number of specific factors that create significant uncertainty with

regard to forecasting future oil consumption in the UK which include

•Future dieselisation of the car fleet

•Uptake of biofuels beyond the existing RTFO commitments

•Impact of government policies to encourage uptake of renewable heat and energy efficiency

“In our Base Case, we expect that jet/kero will be the UK’s main growth product over the

period to 2030, with demand growth for gas/diesel oil gradually moderating as a result of

vehicle efficiency improvements and a slackening of the dieselisation trend in the car fleet.”

A second recent investigation was that undertaken by Deloitte (2012) “Study of the UK

Petroleum Retail Market” this found:

That the Petrol Filling Station network was continuing to shrink

That the Supermarkets continued to grow their market share

That independent filling stations continued to be under pressure of closure

The Rural Motor Fuel Market

fig 6.14

The diagram above (fig 6.14) shows the position in the rural motor fuel market. We can see

that the demand curve for motor fuel has been unaffected by changes in taxation. There has

been no reduction in fuel consumption in response to the fuel duty escalator. The cost to the

consumer in rural areas (mpc+t) exceeds the cost to society (msc) from motoring.

223

For the socially optimal position to be reached, taxation in rural areas will have to be

reduced. The present situation clearly puts rural communities at a disadvantage. A number of

possible solutions to this problem might be considered, and we will do so below. These will

not result in a loss in tax revenue, but rather in its redistribution in light of the manifest

unfairness of the current tax regime. It is reasonable for society to seek to impose a tax in

order to recover the social cost imposed on society. It is not reasonable however to levy such

a tax at a rate way beyond the social cost imposed. That is the present position in the

countryside, particularly in the North West Highlands and Islands.

The diagram below (fig 6.15) shows the position in the urban motor fuel market. We can see

that the demand for motor fuel has been unaffected by changes in taxation. There has been no

reduction in fuel consumption in response to the fuel duty escalator. In this case however, the

cost to society (msc) exceeds the cost to the consumer (mpc+t) from motoring.

The Urban Motor Fuel Market

fig 6.15

For the socially optimal position to be reached, taxation in urban areas will have to be

increased. The present situation fails to tackle the high levels of pollution and congestion

224

found in urban centres. Again, there are lots of possible ways to tackle this problem and they

are considered below. They will require a redistribution of tax revenues from urban areas to

provide assistance to rural areas where tax rates are presently too high. Consequently, taxes

in urban areas will require to increase to fund subsidies to rural areas. It is reasonable to do

so, as the social costs of urban motoring have not, as yet, been fully internalised.

Conclusions

This chapter has looked in considerable detail at levels of pollution in the UK caused by road

transport, and at the proportion of these pollutants attributable to road transport. We looked

at the Royal Commission on Environmental Pollution and in particular, at the fuel duty

escalator which they originally proposed. We also looked at various current policies at both a

European level and at a UK level. We considered a wealth of evidence on current policies

from academic research. We gave detailed consideration to future policy proposals.

We concluded as follows:

The fuel duty escalator caused a reduction in the demand for motor fuels after 2007;

The fuel duty escalator wasn’t the cause of reduced urban pollution or congestion;

The fuel duty escalator results in rural petrol & diesel prices which are too high and urban

prices which are too low to reflect the damage caused by motoring;

Levels of pollution from motor vehicles are falling as a result of European Directives on

motor fuels, the agreements with car manufacturers to reduce emissions from engines,

and the fitting of catalytic converters.

We would recommend that:

The fuel duty escalator (now abandoned) never be reintroduced;

The European Commission should continue the task of reducing emission levels through

further Directives on motor fuel standards and through agreements with vehicle

manufacturers;

Congestion charges should be imposed in urban areas through

1. Workplace parking charges and/or

2. Electronic tagging for road use charging

Charges in urban areas should be used to reduce fuel prices in rural areas by:

225

3. Using fuel duty receipts and/or

4. Using parking charge receipts and/or

5. Using receipts from electronic tagging

We hope that some combination of these measures, coupled with investment in public

transport should secure for society a position much nearer to the social optimum.

226

7) Prices and Markets in the EU

This Chapter deals with prices and markets in the European Union. In it we will seek to

compare the operation of EU markets for motor fuels with the operation of the UK market.

We will seek to draw on the experience of other EU states in tackling the problems common

to all member nations and see how we might adapt policies from these states to improve

things in the UK. We will look at:

Prices of motor fuels in the EU;

The Market for motor fuels in the EU;

Individual Markets in the EU and urban/rural price dichotomies

National measures to control pollution & congestion in the EU;

Conclusions.

Prices of Motor Fuels in the EU

Our first subject is prices of motor fuels in the European Union. The following diagrams (figs

7.1 to 7.6) show motor fuel prices and taxes in the European Union at 4th

March 2013.

The graph fig 7.1 shows that the UK does have a comparatively low price for unleaded petrol

net of duty and taxes. Petrol prices are only lower in Austria net of duty and taxes.

Fig 7.2 for diesel shows that here the position is slightly worse, but the UK remains near the

bottom of the price table net of Duty and taxes. Both petrol and diesel show a relative

improvement for the UK from the position when we last looked at the market in 2001.

227

fig (7.1)

fig (7.2)

228

When we last looked at the market, taxes on petrol (fig 7.3) in the UK were 58% higher than

those found in the rest of the EU. Presently five nations have higher taxes on petrol than the

UK. These are Finland, Greece, Sweden, Italy and The Netherlands. UK taxes on petrol are

presently only 4.41% above the weighted average price across the EU’s 27 member states.

Taxes on diesel (fig 7.4) were even more out of line. They were 120% higher than those

found, on average, in the rest of the EU when we looked in 2001. The present differential is

comparatively better at “only” 31.26% higher than the weighted average for the EU 27.

The consequences of higher duty and tax in the UK can be seen in a further two diagrams.

The retail price of unleaded petrol in the UK is 19.4% higher than in Bulgaria. Again, diesel

Is even worse. The retail price of diesel in the UK is 26.82% higher than in Lithuania.

The main cause of higher petrol and diesel prices in the UK is clearly the level of duty and

taxation being imposed by government. The fuel duty escalator has, as we have seen, had

very little effect on motor fuel demand. As an environmental tax it has had no merit

whatsoever. Prime Minister Tony Blair admitted that the reason for the tax was not

environmental. Rather it is to provide general taxation receipts for spending on the health

service and on education. Mr Brian Wilson has gone further. He appears to think that there is

no alternative to the present method of taxation. Allegedly it cannot be amended without

schools and hospitals losing out as a result. This was an inadequate response from a

government to what was clearly an iniquitous tax. Steps must be taken to reduce prices in the

Highlands & Islands, even if this requires them to be increased in urban areas. Labour’s

replacement the Conservative / Liberal Democrat coalition has taken steps which have helped

both through discontinuing the Fuel Duty escalator and in obtaining a derogation from the EC

to reduce fuel duty in remote areas. Sadly this seems to have benefited the oil industry rather

than consumers as the reduction in duty didn’t lead to a fall in retail prices.

229

fig (7.3)

fig (7.4)

230

fig (7.5)

fig (7.6)

231

The improvement in the relative position of the UK over the period from 2000 until now has

been marked. The reason for this has more to do with the collapse in value of the £ sterling

against the Euro rather than the reticense of the UK government to put up fuel taxes.

The Market for motor fuels in the EU

This section looks at the markets for motor fuels in the EU. The following diagram (fig 7.7)

shows that the demand for gasolines from the European Union’s twenty-seven members has

fallen markedly over the last ten years as consumers switched demand from petrol to diesel.

Source: Adapted from BP Statistical Review of World Energy 2012

fig (7.7)

The pattern of demand differs markedly from that for diesel (see fig 7.8). This showed a

pretty constant rate of increase until the recession of 2008 since when demand has trended

back down. It remains to be seen if this trend is a temporary adjustment caused by the

financial crisis or represents a permanent change in the pattern of demand. Time will tell.

232

Source: Adapted from BP Statistical Review of World Energy 2012

fig (7.8)

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1970, 1997 and 2011

fig (7.9)

233

Fig 7.9 above shows the increase in the number of cars per thousand inhabitants. The final

chart (fig 7.10) shows the percentage change of households in each member state owning a

car.

The above chart shows a considerable amount about the development of certain countries in

the EU over the forty-one year time period covered. Greece went from having 26 cars per

thousand inhabitants in 1970 to 388 cars per thousand people in 2011. Portugal saw an

increase from 49 cars per thousand people to 442 per thousand in 2011. Over the same time

period Spain increased car ownership from 70 to 483 per thousand inhabitants.

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fig (7.10)

These figures correlate well with figures for per capita income, shown in the table

below:

234

Table 7.1 Source: 1998 Figures - Adapted from OECD in Figures (1999) Paris, OECD, Page 79

2011 Figures – Adapted from http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do#

The above table shows that Luxembourg had the highest GDP per capita in Purchasing Power

Parity (PPP) in 2011. It also shows that the lowest GDP per capita in 2011 was found in

Bulgaria & Romania. We can deduce from this that the rate of car ownership is strongly

related to income. Cars are a normal good, as income rises, so levels of car ownership are

seen to increase. In these circumstances, as income rises the demand for motor fuels will

increase.

We have attached three further diagrams which show (fig 7.11) the number of people per

filling station in each member state in 2011, the number of filling stations per member state

Member State GDP per capita

$ PPP 1998

GDP per capita

€ PPS 2011

Luxembourg 34,536 68,100

Denmark 26,280 31,500

Belgium 24,097 29,900

Austria 23,985 32,400

Netherlands 23,082 32,900

Germany 22,835 30,300

Ireland 22,509 32,500

France 22,091 27,200

Italy 21,739 25,100

Finland 21,659 28,800

Sweden 21,213 31,800

United Kingdom 21,170 27,400

Spain 16,740 24,700

Portugal 15,266 19,500

Greece 14,463 20,100(p)

Bulgaria 11,600

Czech Republic 20,200

Estonia 16,900

Cyprus 23,700

Latvia 14,700

Lithuania 16,600

Hungary 16,500

Malta 21,500

Poland 16,200

Romania 11,400(p)

Slovenia 21,000

Slovakia 18,400

http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do

235

in 2011 (fig 7.12) and a further chart which shows the coverage (density) of filling stations in

each member state. These show that in the case of Austria, there are 2,582 people per filling

station, there are a total of 3,140 filling stations, and that there is one filling station per 27

square kilometres.

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2 01 1 - EUROPIA 2 0 11 An nu a l Re po rt

E uro pea n U nio nPeople per Filling Station (2011)

fig (7.11)

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European UnionFilling Stations per Member State (2011)

fig (7.12)

fig (7.13)

The above chart demonstrates that if you’re in Luxembourg you don’t have to travel far to

find a filling station. If however you live in Finland, Sweden or the Highlands & Islands of

237

Scotland then the distance is far greater. The filling station network in these areas is already

far from adequate . We must ensure that this network is not further diminished as time goes

on.

Individual Markets in the EU and urban/rural price dichotomies

Our next section looks at individual markets in the EU also looking at the dichotomy in prices

which exists between urban and rural locations within member states. We will look at how

the market has been affected in each of the member states in which we can find evidence of a

dichotomy existing. We will be particularly interested in the steps which are taken to

ameliorate the problems found and also at any steps which have resulted in a deterioration in

the position of rural areas. Duty and VAT rates for all energy products and electricity are

considered. These can be found at the following location:

http://ec.europa.eu/taxation_customs/index_en.htm#

http://ec.europa.eu/taxation_customs/index_en.htm

238

Austria

The percentage shares of various players in the Austrian petrol market are given in the

diagram below:

BP

14.9%

ENI

11.8%

Shell

10.1%

OMV

9.2%

Avanti

5.1%

JET

5.8%

MOL

0.8%

Genol

7.1%

Turmol

4.4%

Avia

4.2%

Others

26.6%

So urce: http://po rtal.wko.at/wk/format_d etail .wk?an gid=1&stid= 668262&dstid=5265

Austrian Petrol MarketPercentage Share of Sites 2013

fig 7_Austria_1

The Scottish Parliament noted that prices in Austria were regulated until 1981. When the

market was liberalised, prices fell, on average, from the resulting competition. The Research

Note comments that improved environmental standards led to the closure of smaller sites.

Austria has two rates of duty on diesel. Where there is (1) a biofuel content of at least 66litres

per 1,000 litres and (2) a low sulphur content of <= 10 mg/kg (10 parts per million) a lower

rate of duty of 39.70 Euro Cents per litre is applied. Where the limit exceeds this or there is a

lack of biofuel content to the level specified then a higher rate of duty of 42.50 euro cents per

litre is used. Refunds of duty on Diesel for agricultural and railway use were abolished by 1st

January 2013. Source: http://ec.europa.eu/taxation_customs/index_en.htm# (pages 16 and 21)

The development of the Austrian petrol station network in recent years is illustrated in the

diagram below:


239

2852

2815

2833

2812

2810

2802

2716

2656

2575

2515

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

0

500

1000

1500

2000

2500

3000

Th

ousa

nds

Source: http://portal.wko.at/wk/format_detail.wk?angid=1&stid=668262&dstid=5265

Austrian Petrol StationsP e rio d f ro m 2 0 0 5 -2 0 1 2

fig 7_Austria_2

Belgium

The diagram below shows the retail market share of the major participants in the Belgian

motor fuel market in 2002:

TotalFina

14.3%

Q8

11.4%

Shell

9.0%

Texaco

8.9%

Esso

8.6%

Jet

6.3%

Octa+

4.3%

Power

2.9%

Avia

2.1%

Others

19.1%

Free

13.1%

Source: www.ianbyrne.free-online.co.uk/country/maps-b.htm

Belgian Petrol MarketPercentage Share 2002

fig 7_Belgium_1

The following diagram shows what the position was looking at the market again in 2012:

240

Total

14.3%

LukOil

5.3%

Q8

10.4%

Shell

6.9%

Argos

2.4%

Avia

3.6%

Others

27.5%

Power

3.3%

Octa+

5.3%

Gabriels

1.9%

Dats 24

2.3%

Esso

8.0%Texaco (Delek)

8.7%

Source: Adapted from http: //www.gps-data-team.com/poi/belgium/petrol/

Belgian Petrol MarketPercentage Share of Sites 2013

fig 7_Belgium_2

The following diagram shows the development of the Belgian petrol market over recent

years:

4,78

7

4,41

4

4,17

7

3,84

6

3,68

6

3,57

4

3,42

0

3,29

5

3,27

0

3,25

5

3,25

8

3,20

9

3,17

5

3,15

8

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

0

1

2

3

4

5

6

Th

ousa

nds

Source: Adapted from http: //www.petrolfed.be/frRapport Annuel (Various Years)

Belgian Petrol StationsP e rio d f ro m 2 0 0 0 -2 0 1 3

fig 7_Belgium_3

241

Denmark

The market share of filling stations in Denmark is shown in the diagram below:

OK

33.2%

Statoil

10.9%

1-2-3

3.5%Jet

3.8%

Uno-X

14.2%

Q8

6.6%

F24

5.8%

Shell

15.3%

Go On Group

1.7%Other

5.0%

Source: Various Company W ebsites

and http ://www.fyidenmark.com/gass tationsindenmark.html

and http ://www.eof.dk/Viden/Publ ikationer/Energinoter.aspx

Danish Petrol MarketPercentage Site Share 2013

fig 7_Denmark_1

The change in the number of outlets in Denmark is shown in the following diagram:

8,00

0

7,20

0

6,10

0

5,00

0

3,90

0

3,00

0

2,54

6

1,99

7

2,00

4

1,99

8

2,00

0

1969

1971

1973

1977

1982

1991

1997

2009

2010

2011

2012

0

1

2

3

4

5

6

7

8

9

Th

ousa

nds

Source: Adapted from http://www.eof.dk/Viden/Publikationer/Energinoter.aspx

Danish Petrol StationsP e rio d f ro m 1 9 6 9 -2 0 1 2

fig 7_Denmark_2

242

Finland

A chart showing participant shares in the Finnish market (in sites) is given below:

ABC Chain

22.2%

Neste Oil

24.9%

SEO Co-op

9.9%

Shell

10.2%

St1

15.1%

Teboil

17.7%

Source: Various Company Websites

and http://www.oil.fi/en/statistics-4-service-stations/41-service-stations

Finnish Petrol MarketPercentage Site Share 2013

fig 7_Finland_1

Development of the Finnish network in recent years is shown in the diagram below:

1,88

0

1,88

0

1,88

5

1,88

0

1,90

0

2,00

0

2,00

0

1,97

0

2,00

0

2,00

0

1,99

0

1,94

7

1,89

2

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

0

500

1,000

1,500

2,000

2,500

Th

ousa

nds

Source: Adapted from http://www.oil.fi/en/statistics-4-service-stations/42-amount-service-stations-finland

Finnish Petrol StationsP e rio d f ro m 2 0 0 0 -2 0 1 2

fig 7_Finland_2

What the above doesn’t show is that from their introduction in this market around 1990

unmanned sites have relentlessly expanded their share of the market and now account for

55.75% of all the retail outlets in Finland.

243

France

France has seen the earliest and the greatest switch from traditional filling stations to

Hypermarket owned sites. French petrol market shares are given in the diagram below:

Total

36.4%

BP

3.4%

Avia

5.1%

AS 24 Fuel

1.9%Esso

5.5%

Geant/Casino

2.3%

Intermarche

12.9%

Carrefour

10.6%

Leclerc

4.7%

System U

6.4%

Others

10.9%

Source: Various Company W ebs ites and

http://www.ufip .fr/?rubrique=4&s s_rubrique=679#

French Petrol MarketPercentage Share of Sites 2012

Fig 7_France_1

France sets duty rates on motor fuels at a regional rather than a national level. Part of the duty

is received by the region to be used as they determine.

As part of its ongoing work in this area, HIAG asked the Euro Info Centre in Highlands and

Islands Enterprise to look at the position in other European countries. The most detailed

response was received from France. Isabelle Mure of the Ministere de L’economie des

Finances et de L’industrie (Euro Info Centre FR 273) replied to the request from Norma

MacDonald of HIE. The information was split into two sections. The first of these dealt with

the activities of the Comite Professionnel de la Distribution de Carburants (loosely translated

as the Trade Committee for Fuel Distribution). The report comments:

“The rationalisation of the fuel retailing network has brought about, over many years, the

closure of the least viable points of sale. In the face of this situation, an order of the 8th June

1984 created the Fund for modernisation of the fuel retailing network, charged with

awarding financial assistance (help with modernisation of points-of-sale & help to exit on the

closure of points of sale) [i.e. Help with site cleanup costs following closure]. These funds

given as a form of intervention payment, were enlarged by an order of the 12th February

1990, entitled “Funds for adjustment of the fuel retailing network; its financing was provided

by a duty on petrol, fuel oil and diesel provided from the coffers of the Energy Ministry.

244

The working of these funds is overseen by an economic development trade committee, the

Trade Committee for Fuel Distribution, created by decree No. 91-284 of the 19th March

1991 whose mission statement is:

The setting out and implementation of programmes of adjustment/development of fuel

retailing networks, to improve productivity & modernise management and market

conditions;

To give assistance to firms to allow them to achieve the agreed programmes.

The resources of the committee mainly comprise of the receipts from the duty on petrol, fuel

(with or without oil) and diesel of 31st December 1991 by decree No. 91-285 of 19th March

1991, set at a limit of 0.13 francs per hectolitre. An order of the 19th March 1991 set the rate

of the tax at 0.10 f/hl to apply from 21 March 1991. This collection rate was kept until 31 Dec

1994 except during several short spells during which the tax wasn’t collected. Since the 1st

January 1995, the tax rate (of collection) has been levied at 0.115 f/hl in virtue of decree No.

94-1214 and of the Order of 30th Dec 1994; this measure applies until 31 Dec 1996. The

measure has been renewed in 1997. Source: Isabelle Mure, Ministere de L’economie des Finances et de L’industrie, Paris

The above order was to ensure that all the remaining rural filling stations met their obligation

to replace single skinned tanks with double skinned ones fitted with gauges for the detection

of leaks at the latest by 31st December 2010. As you might expect, the levy was not

maintained and the fall resulted in a backlog of filling stations waiting for funding to become

available. The extent of the decline in the French filling station network is shown below:

4150

0

3200

0

2450

0

1840

6

1622

7

1549

8

1491

8

1421

9

1383

5

1350

4

1317

0

1292

9

1269

9

1252

2

1205

1

1179

8

1166

2

1980

1985

1990

1995

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0

10

20

30

40

50

Th

ousa

nds

Source: Adapted from UFIP Panorama Petrolier http://www.ufip.fr/

French Service StationsD e c lin e f ro m 1 9 8 0 t o 2 0 1 2

Fig 7_France_2

Questioned in the National Assembly by Mme Anne-Marie Escoffier on the provision of

funding for CPDC activities the Minister M. Benoist Apparu drew attention to the relaxation

245

of the timeframe for implementation from 31st Dec 2010 to 31

st Dec 2013.

Source: http://www.senat.fr/questions/base/2011/qSEQ11021207S.html

The second part of the information passed to HIE’s Euro Info Centre related to fiscal regime

concessions. Again, a translation is attempted below:

Fiscal Regime Concessions

Conditions on the use of petroleum products

Article 265, table B, of the Customs Code which fixes the level of tax on petroleum products

allows either total exemption from the tax or its application at a reduced rate on petroleum

products used for certain purposes. Those on which the tax regime allows privileges in their

use are the following products

Domestic Fuel Oil

Fuel oil taxed at a reduced level

Burning oil

Light, Medium, or Heavy levies a reduced tax for reasons of usage or an exemption (in

the case of aviation fuel)

White spirit & paraffin

Products charged at a lower rate of tax when used for burning

Gas (butane/propane)

Butane, propane or others charged a lower rate of tax.

It should be clear that they are subject to a strict fiscal regime which doesn’t confer any

favours with regard to the application of customs duties.

1. Domestic fuel oil No. 1 & 2

The two categories of domestic fuel oil which are admissible to benefit from tax reduction

are:

(1) Those containing [dye] colorants (red) and statutory trace agents

(2) Those which are used solely for one of the following

For burning in motors other than for propulsion, or in motors of propulsion for a

limited number of vehicle types (trains, tractors & agricultural machinery)

(cranes, mechanical diggers, dump trucks)

As lubrication, exclusively as lubricating oil

For all other uses of fuel and lubricants, notably as burning oil and as feedstock

2. Jet Engines

Aeronautical jet engines, fuel used in aircraft has been exempt from tax since the 1st of

January 1993.

http://www.senat.fr/questions/base/2011/qSEQ11021207S.html

246

Jet engines “under conditions of usage” are subject to a lower rate of tax in accordance with

its usage:

In jet engines or turbines used exclusively as fixed motors, motors other than for

propulsion.

In motors of propulsion for engines running on rails and for hovercraft used exclusively

on water.

Fuel or fuel mix used in jet engines for other purposes are taxed at the respective rates for

gasoil or domestic fuel oil.

3. White Spirit and Kerosene (Paraffin)

The system of duty applicable to the above products is that for domestic fuel oil, when they

are used as domestic fuel.

4. LPG fuel

This product is subject to a lower rate of fuel duty when it is used:

In vehicle engines and in unregistered vehicles;

- for off road use

- for use in construction, civil engineering and public works;

In fixed motors.

Source: LOI n°2011-1977 du 28 décembre 2011 - art. 21

From the above we can see that there are a wide variety of concessions available in France, as

in the UK regarding the rates of fuel duty charged. These aim to reduce the cost of fuel oil

used for domestic heating and for off-road power generation. Trains, tractors, agricultural

machinery, cranes, mechanical diggers, fishing boats and dump trucks benefit in this way.

Whilst the UK system of concessions is somewhat similar to the above scheme, what France

also had was a “Thousand Village” scheme. Patsy Richards, in a Research Note entitled

“European Petrol Retailing” for the Scottish Parliament (RN 00/38) gives evidence

concerning the “1,000 French villages” scheme providing funds for the establishment or

revival of a business in a rural area. It mentions that funding is provided from a variety of

sources, including an “Intervention Fund for the Preservation of Craft Trades and

Commerce” funded by a tax levied on superstores. Source: Scottish Parliament (2000) Research Note 00/38 European Petrol Retailing, Page 5.

No trace of this scheme remaining in place could be found in 2013.

The HIE/HIAG information on the activities of the Comite Professionnel de la Distribution

http://www.legifrance.gouv.fr/affichTexteArticle.do;jsessionid=A5DD6FDE27747E2FFB73D0D7EA0167D4.tpdjo13v_1?cidTexte=JORFTEXT000025044460&idArticle=LEGIARTI000025048278&dateTexte=20130611&categorieLien=id#LEGIARTI000025048278

247

de Carburants, where a tax of approximately 1p per hundred litres was levied to modernise

motor fuel retail outlets is most relevant here. This levy provides funds to assist in keeping

rural retail outlets open. That we think this would be a good idea when our market is so

similar to the French motor fuel market should come as no surprise. This central government

tax should be subject to homologation, that is, ring-fenced for this purpose in next year’s

budget. It should be passed to rural councils to spend on renewing the infrastructure of

existing motor fuel sites and also on assisting the expansion of LPG and/or Hydrogen outlets.

Such a tax might be raised as a small increase in motor fuel duty or a levy on supermarkets.

The above schemes are approved of at an EU level as derogations provided by the European

Council from the requirements of Council Directive 2003/96/EC . This Directive is in the

final stages of being amended and updated by a draft directive published in 2012.

Source: http://ec.europa.eu/taxation_customs/taxation/excise_duties/energy_products/legislation/

At present the rate of VAT in France is 19.60% for both petrol and diesel. Source: http://ec.europa.eu/taxation_customs/index_en.htm# (pages 8 and 14)

There are also taxes levied on energy products. These are:

1) TICPE (Taxe Intérieure de Consommation sur les Produits Energétiques) for petrol and

diesel.

2) TICGN (Taxe Intérieure de Consommation sur le Gaz Naturel) for LPG and other auto gas

products.

3) A previous fiscal levy to fund the French Petroleum Institute ( now the IFP EN) has since

the 1st January 2003 been included in the TICPE and the TICGN.

The Regional TICPE applicable in each area for 2013 is as follows:

Régions Euro Cents/litre

Diesel Petrol

SP 95 et 98 Alsace 2.5 2.5 Aquitaine 2.5 2.5 Auvergne 2.5 2.5 Basse Normandie 2.5 2.5 Bourgogne 2.5 2.5 Bretagne 2.5 2.5 Centre 2.5 2.5 Champagne Ardennes 2.5 2.5

http://ec.europa.eu/taxation_customs/taxation/excise_duties/energy_products/legislation/


248

Corsica 0 0 France Comté 2.5 2.5 Haute Normandie 2.5 2.5 Ile de France 2.5 2.5 Languedoc Roussillon 2.5 2.5 Limousin 2.5 2.5 Lorraine 2.5 2.5 Midi Pyrénées 2.5 2.5 Nord Pas de Calais 2.5 2.5 Pays de la Loire 2.5 2.5 Picardie 2.5 2.5 Poitou Charentes 0 0 Rhône Alpes 1.15 1.77 PACA 2.5 2.5 (i) Corsica and Poitou Charentes have chosen not to levy a regional TICPE tax.

(ii) Rhône Alpes has levied the TICPE at a lower level. Source: http://www.developpement-durable.gouv.fr/La-fiscalite-des-produits,11221.html

and http://www.developpement-durable.gouv.fr/La-fiscalite-des-produits,31455.html

Germany

The percentage shares of the German petrol market held by the various market players is

shown in the diagram below:

Aral

16.6%

Shell

14.5%

Esso

7.3%

Total

7.0%

AVIA

5.5%

Conoco

5.3%

Raiffeisen

4.3%

Orlen

3.9%

ENI

3.0%

Tamoil

2.7%

bft

15.7%

Others

14.0%

Source: Adapted from http://www.bft.de/daten-und-fakten/245/

German Petrol MarketPercentage Share 2013

Fig 7_Germany_1

HIAG found that Germany provides for lower duty in rural areas where Liquid Natural Gas

(LNG) is used. Trailers of trucks used for predominantly rural purposes can also be exempted

from taxes. Source: Ellen Oesterreich (1997) Deutscher Industrie - Und Handelstag, Bonn

http://www.developpement-durable.gouv.fr/La-fiscalite-des-produits,11221.html

http://www.developpement-durable.gouv.fr/La-fiscalite-des-produits,31455.html

249

The Scottish Parliament found that in Germany, the Lander and the European Commission

have introduced schemes to counter the unwillingness of wholesalers to supply rural areas,

and the tendency of wholesalers to impose high delivery charges in rural areas. Source: Scottish Parliament (2000) Research Note: European Petrol Retailing, op cit, Page 5.

Germany sets two rates for Duty on Diesel, where the sulphur content is greater than 10 parts

per million (10 mg/kg) the rate is 48.57 Euro Cents per litre. Where the sulphur content is

lower than this then a rate of 47.04 Euro Cents per litre applies. Germany adds 19.00% VAT

to motor fuels. Source: http://ec.europa.eu/taxation_customs/index_en.htm# (page 14)

The development of the German petrol station network over the last 50 years is shown in the

diagram below:

4064

0

4584

9

3551

9

2702

6

1901

9

1827

1

1797

6

1606

1

1507

0

1441

0

1436

7

1437

3

1432

8

19

65

19

70

19

75

19

80

19

85

19

90

19

95

20

00

20

05

20

10

20

11

20

12

20

13

0

10

20

30

40

50

Th

ousa

nds

Source: Adapted from http://www.bft.de/index.php/daten-und-fakten/entwicklung-tankstellenanzahl/

German Petrol StationsP e rio d f ro m 1 9 6 5 -2 0 1 3

Excluding Autobahn Sites

fig 7_Germany_2


250

Greece

Elinoil

8.1%Avin

7.2%

Aeg ean

7.7%

Eko

14.9%

Hellenic

14.3%Jetoil

8.6%

Revoil

7.5%

Eteka

3.9%

Others

27.9%

Source: Various Company W ebs ites

http://www.seepe.gr/si te /main2.php?lang=en&page=contentCat&contentID=30

Greek Petrol MarketPercentage Share 2011

fig 7_Greece_1

The Scottish Parliament found that European Directive 92/82/EEC allows Greece to apply

rates of excise duty up to €22 per 1,000L lower than the minimum rate laid down in the

Directive on petrol used in the departments of Lesbos, Chios, Samos, the Dodecanese and the

Cyclades and on the following islands in the Aegean: Thasos, North Sporades, Samothrace

and Skiros. Source: Scottish Parliament (2000) Research Note: European Petrol Retailing, op cit, Page 2.

and http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&numdoc=31992L0081&model=guichett&lg=en

The Scottish Parliament went on to comment on an International Energy Agency (IEA) report

on Greece which noted that petroleum product prices were liberalised in 1992. It commented

that Greek petrol prices were amongst the lowest in Europe, but also noted that the quality of

the fuel was poor. It also points out that unlike Spain, where the practice has been

abandoned, the Greek government continue to be able to introduce price ceilings on petrol

from time to time, to protect consumers from exploitation. Source: Scottish Parliament (2000) Research Note: European Petrol Retailing, op cit, Pages 7-8.

Greece was given time to adjust its national taxation levels to the European minima

http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&numdoc=31992L0081&model=guichett&lg=en

251

prescribed under Council Directive 2003/96/EC

http://eur-

lex.europa.eu/Notice.do?val=286719:cs&lang=en&list=436761:cs,436698:cs,436697:cs,436696:cs,429470:cs,528472:cs,286719:cs,413904:

cs,403495:cs,&pos=7&page=2&nbl=19&pgs=10&hwords=council%20directive%20ec~&checktexte=checkbox&visu=#texte

the Greek market has developed since the comments above in the year 2000. Greece enjoyed

a reduction in duty on diesel in the winter months, but since 12th

October 2012 this has been

swept away. The rate throughout the year is now 33.00 Euro Cents per litre. VAT is added to

this at a rate of 23.00%. All unleaded petrol carries excise duty at a rate of 67.00 Euro Cents

per litre.

Source: http://ec.europa.eu/taxation_customs/index_en.htm# (pages 8 and 14)

Ireland

The up-to-date breakdown of share of sites in Ireland is given in the diagram below:

T exac o

13.3%

Esso

7.4%

T opaz

17.7%

T op

1.7%

Maxol

9.0%

Amber

1.9%Campus

4.0%

Estuary

1.3%

Great Gas

3.9%

Independents

19.4%

applegreen

4.2%

Emo Oi l

4.1%

Others

12.2%

Source: Adapted from http: //pumps.ie/findStationsByBrand.php

Irish Petrol MarketP e rc e nta ge Sh a re of S ite s 2 0 1 3

Fig 7_Ireland_1

When we last looked at the Irish Market in year 2000 the Republic of Ireland enjoyed lower

rates of fuel duty than existed in the north and had consequently become the source of much

of the motor fuel used in Northern Ireland. The size of the anomaly in duty rates was forcing

http://eur-lex.europa.eu/Notice.do?val=286719:cs&lang=en&list=436761:cs,436698:cs,436697:cs,436696:cs,429470:cs,528472:cs,286719:cs,413904:cs,403495:cs,&pos=7&page=2&nbl=19&pgs=10&hwords=council%20directive%20ec~&checktexte=checkbox&visu=#texte




252

filling stations in Northern Ireland to close. There was a clear case for reducing fuel duty in

Northern Ireland, and it should even be argued that this would increase UK government

revenue as lower tax rates would result in more fuel purchases in the north and higher Duty

and VAT receipts for the Treasury. This situation offered a “Laffer Curve” effect, with higher

rates of duty causing Northern Ireland motorists to purchase fuel in the south with the Duty

and VAT being paid to the Irish, and not the UK Treasury. Westminster Government

persistence in defending the status quo seemed perverse. The up-to-date position remains the

same depriving the UK Government of Duty & VAT receipts and boosting the Irish Treasury. Source:

(1) Scottish Parliament (2000) op cit, Pages 8 & 9.

(2) House of Commons (1998/99) Northern Ireland Affairs Select Committee, Third Report, HC334.

(3) Petroleum Review (2000) UK Retail Marketing Survey, Pages 35 & 36.

(4)Position in 2013: http://ec.europa.eu/taxation_customs/index_en.htm# (pages 14 and 18)

The change in filling station numbers is shown in the diagram below:

1,93

2

1,86

2

1,62

0

2008 2009 2013

0

500

1,000

1,500

2,000

2,500

Th

ousa

nds

Source: Adapted from Petroleum Review Retail Mkt Survey 2010

and http://pumps.ie/findStationsByBrand.php

Irish Petrol StationsP e rio d f ro m 2 0 0 8 -2 0 1 3

fig 7_Ireland_2

Italy

In Italy, there are 2,880 people per filling station, there are a total of 23,100 filling stations in

2011, and there is one filling station per 13 square kilometres. This shows that Italy has a

relatively dense network of filling stations. The large number of sites selling relatively low

levels of throughput, with a high concentration ratio for the sector means that Italy has high


253

prices for motor fuels. In Italy in recent years there has been a switch from manned to

self-service filling stations. There has also been the closure of a large number of sites with

site numbers down from 28,200 in 1996 to 25,400 in 1998 and down again to 23,100 in 2011.

2820

0

2390

0

2240

0

2290

0

2310

0

19

95

20

00

20

05

20

10

20

11

0

5

10

15

20

25

30

Th

ousa

nds

Source: Adapted from Unione Petrolifera Databook 2013 p85

Italian Petrol StationsP e rio d f ro m 1 9 9 5 -2 0 1 1

fig 7_Italy_1

This reduction in site numbers has been actively encouraged by the Italian state, which wants

to see fewer sites selling higher volumes, thus bringing greater competition for Eni’s

dominant firm oligopoly and consequently, lower prices for consumers. As with the UK, the

real losers in this situation look like being rural motorists and independent filling station

owners. Independent firms in Italy made up approximately 6% of the market in 1998

operating from 2,000 outlets, and were represented by the Consorzio Grandi Reti (association

of independent service station owners) which consisted of 42 member firms. Source: Staffetta News (1998/1999) published by Rivista Italiana Petrolio, Rome, Vol 1, No 11 & Vol 2, No 1.

In 2013 the Grandi Reti still operates selling from around 1,800 sites and holding about 5%

of the Italian market. Source: http://88.37.64.110/GR.htm

Italy obtained a derogation from the requirements of Directive 92/81/EEC for the regions

of Val d’Aosta and Gorizia. Source: Scottish Parliament (2000) op cit, Page 2.

The “European” 27/5/94-2/6/94 carried an article entitled “Free petrol will help to fuel

http://88.37.64.110/GR.htm

254

campaign for more visitors” which claimed that Italy intended to re-introduce the offer of

free petrol to visitors in an attempt to capture a larger share of the tourist market. We have

not seen any more recent comment on this proposal and are unsure whether it was in fact

implemented. If such a scheme is permissible, it would be most welcome in the North of

Scotland.

Source: “The European” (27/5/94-2/6/94) “Free petrol will help to fuel campaign for more visitors” The

European.

Agip28.5%

IP15.0%

Api4.2%

Erg6.8%

Esso16.8%

Fina5.0%

Kupit11.1%

Shell6.7%

Tamoil5.0% Others

0.9%

Sou rc e : Sta ff et ta News , De c 19 9 8, Vol 1, No 11 , Pa g e 9.

I ta lian P e tro l M a rke tP e rc e n t a g e S h a re

Jan-Jun 1998

fig 7.14

The diagram above shows the percentage shares of the Italian petrol market held by the

various firms in 1998.

An updated version is shown below for the position in 2013, this time based on the

percentage share of sites.

255

ENI (Agip)21.0%

API (API-IP)18.4%

ERG (Total)14.5%

Q812.9%

Esso12.3%

Tamoil (HEM)9.7%

IES1.0%

Shell5.9%

Others4.3%

Sour c e: Var ious Company W ebs ites

I t a lia n P e tro l M a rke tP e rc e n t a g e S h a re o f S ite s 2 0 1 3

fig 7.14a

Luxemburg

The market share of participants in the Luxemburg motor fuel market is given below:

Aral

16.9%

Kuwait

16.1%

Shell

16.1%

Delek / Texaco

6.0%

BP

1.6%

Esso/ Petrocenter

17.7%

Gulf

4.8%

Lukoil

0.8%

Total

16.9%

Luxoil

0.4% W olter

2.4%

Source: Various Company Websitesa n d h ttp :/ / w w w .p e tro l. lu /

Luxemburg Petrol MarketPercentage Site Share 2013

fig 7_Luxemburg_1

The development of the market in recent years is shown in the diagram below:

256

1,88

0

1,88

0

1,88

5

1,88

0

1,90

0

2,00

0

2,00

0

1,97

0

19

81

19

85

19

90

19

95

20

00

20

05

20

10

20

11

0

500

1,000

1,500

2,000

2,500

Th

ousa

nds

Source: Adapted from GPL Websitehttp://www.petrol.lu/Statistiques/

Luxemburg Petrol StationsP e rio d f ro m 1 9 8 1 -2 0 1 1

fig 7_Luxemburg_2

The Netherlands

When we last looked at the market the Dutch had a situation where fuel duty was higher than

in neighbouring states and supermarkets didn’t sell petrol resulting in higher prices for

consumers. As a consequence of this, they attempted to subsidise filling stations near the

German border to protect them from lower priced German competition. This approach was

held by the Commission to constitute an illegal subsidy. Much of the state aid paid out had to

be repaid by its recipients. Source: Scottish Parliament (2000) Research Note: European Petrol Retailing, op cit, Pages 6-7.

Cool (1996) advocated this graduated fuel duty for The Netherlands as a solution to the

problems of pollution and congestion in urban areas. A lower rate of excise duty could be

provided in rural areas, and a higher rate in urban areas. Clearly, he had not anticipated the

intervention of the European Union kyboshing his plan. His problem was to attempt to tackle

pollution and congestion in isolation from the wider issue of competition policy in an EU

context, clearer guidance from the EU in the first instance might have prevented this

difficulty arising. Source: Cool, Thomas (1996) A Graduated transport fuel excise for metropolitan areas, found at:

http://netec.wustl.edu/WoPEc/data/Papers/wpawuwppe9605001.html

257

The market share of the various players in the Dutch filling station sector is given in the

diagram below:

Shell

17.3%

Tamoil

4.0%

BP

9.4%

Texaco/ Delek

12.3%

Tango (Kuwait)

3.0%Total

12.9%

Esso

8.4%

Tinq (Gulf)

5.7%

Avia

5.4%

Q8

3.5%

Gulf

3.1%

Others

15.0%

Source: Adapted from http://poi.gps-data-team.com/netherlands/petrol/

Dutch Petrol MarketPercentage Share 2013

fig 7_Netherlands_1

Fuel Duty in the Netherlands is now slightly lower (44.028 Euro cents/Litre) than is the case

in Germany (47.04 Euro cents/Litre). Conversely VAT is 21.00% on motor fuels in The

Netherlands and only 19.00% in Germany. There are no reduced rates of duty for agriculture

in the Netherlands.

Source: http://ec.europa.eu/taxation_customs/index_en.htm# (pages 14 and 16)

Changes in the Dutch filling station network in recent years are given in the following

diagram:


258

4,23

6

4,27

7

4,31

9

4,33

5

4,30

9

4,24

3

4,16

8

4,20

7

4,20

6

4,21

5

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0

1

2

3

4

5

Th

ousa

nds

Adapted from http: //www.bovagrai.info/auto/2012/index.html

and http: //www.bov ag-cij fers.nl/archiv e/bovag/2005/nl/autohttp://www.hbd.nl/pages/4026/Branches/Pompshops/Tankstations-in-cijfers.html

Dutch Petrol StationsP e rio d f ro m 2 0 0 3 -2 0 1 2

fig 7_Netherlands_2

Portugal

The motor fuel market shares for Portugal are shown in the diagram below.

Galp

27.8%

Repsol

14.7%

BP

12.1%

CEPSA/Total

9.8%

OZ Energia

0.1%

Independents

28.0%

Supermarkets

7.5%

Source: Adapted from

http://www.apetro.pt/index.php?option=com_content&task=view&id=262&Itemid=182

Portuguese Petrol MarketPercentage Share of Sites 2012

Fig 7_Portugal_1

Portugal was allowed a derogation from the European Directive 92/82/EEC which sets

mandatory minimum rates of duty on motor fuels within the European Union. In the case of

the Azores, this is to compensate for the:

“transport costs incurred as a result of the insular and dispersed nature of this region.”

259

Source: Council Directive 92/82/EEC, Article 9

A further directive, European Directive 92/81/EEC allows Portugal with the unanimous

support of the European Council, to reduce duties charged in Madeira below the mandatory

minima by an amount which reflects the extra cost of transportation to the region. Source: (1) Scottish Parliament (2000) Research Note: European Petrol Retailing, op cit, Page 3.

(2) Council Directive 92/81/EEC, Article 8, Para 4 (see below for Eur-Lex link).


HIAG obtained information from Portugal which showed that Portuguese farmers also

enjoyed reductions in duty on fuels. It appears that service stations charge farmers the lower

rate (five twenty-fourths), and then recover the balance (nineteen twenty-fourths) from the

Direcao-Geral de Hidraulica, Engenharia, Rural e Ambiente, who are in turn funded by the

Direcao-Geral das Alfandegas e Impostos Especiais. At 1st January 2013 the rate was 7.751

pence per litre as opposed to the regular rate of 36.753 ppl. The VAT rate on agricultural

diesel was also lower at 13.00% as opposed to 23.00% for road diesel and for petrol.

Source: http://ec.europa.eu/taxation_customs/index_en.htm# (page 18)

2556

2359

2573

2804

2008 2009 2010 2012

0

500

1000

1500

2000

2500

3000

Source: Adapted from http://www.apetro.pt/index.php?option=com_content&task=view&id=262&Itemid=182

Portugese Service StationsC h a n g e f ro m 2 0 0 8 t o 2 0 1 2

Fig 7_Portugal_2

Spain

The diagram below shows the market for petrol in Spain as at the middle of June 2013:



260

BP

4.6%CAMPSA

5.8%

CEPSA

15.2%

GALP

6.3%

PETRONOR

2.9%

REPSOL

27.2%

SHELL

4.1%

OTHER

33.9%

Source: Adapted from http ://geoportal .mi tyc.es/hidroc arburos /

Spanish Petrol MarketPercentage Share 2013

fig 7_Spain

We believe that there are parallels between the position of the rural motorist in Spain and

rural motorists elsewhere. From 1927 onwards, the supply of motor fuels in Spain was

provided by the state monopoly. Under such a system, there was no price discrimination. All

consumers paid the same for their fuel, as all retailers bought at the same price. On Spain’s

accession to the European Union, the system evolved with the refining, wholesaling and

retailing operations gradually being opened up to foreign investment and foreign competition.

Regulation and monopoly were abandoned. In 1990 state administered prices were replaced

by ceiling prices. These allowed the Spanish Government to cap motor fuel prices. As a

consequence, there was little opportunity for the oligopolists selling motor fuel to collude

with one another to raise prices and profits in the Spanish market.

In October of 1998, this system of ceiling price regulation was abandoned. It was felt that on

average consumers would be better off with a greater degree of competition in a tightly

concentrated market. The Spanish Government of Felippe Gonzales, aware of the likely

consequences of total liberalisation, set a ceiling price of 2ptas between maximum prices and

average prices. The incoming Aznar government chose to abandon this measure as it would

not cover the extra cost of transport from refineries to central Spain. The Spanish Ministerio

261

de Industria identified the differences between maximum and average prices for motor fuels

in 1995 as being as follows:

Member State Price Difference

Maximum > Average

1995 (pesetas)

France 11.0

United Kingdom 11.0

Germany 8.5

Belgium 8.0

Netherlands 4.5

Italy 3.0

Spain 2.0

Table 7.2 Source: Adapted from Ignacio Contin, Correlje, A, and Huerta, E, (1999) “The Spanish Gasoline Market: From

Ceiling Regulation to Open Market Pricing,” Energy Journal, Vol 20, No 4, Pages 1-14.

So Spain’s Government have decided that in order to make their market more efficient, they

must end ceiling prices. Ceiling prices had become the actual prices in the market, and these

actual prices were higher than in some other EU countries with greater competition. They did

not however leave their consumers entirely unprotected. They set up an independent

regulatory agency for the energy sector La Comisión Nacional de la Energía (CNE). Its

powers are only for consultation and inspection.. The sector is also subject to review by the

Competition Court, the Tribunal de Defensa de la Competencia. In light of the experience of

the UK’s rural consumers, we can only hope they take their responsibilities seriously.

We note that there is no such dedicated regulator for this sector in the UK. In a further paper

several years later “Competition, regulation, and pricing behaviour in the Spanish retail

gasoline market” (2006) Ignacio Contın-Pilart, Aad F. Correlje and M. Blanca Palacio

concluded that ceiling price regulation “forced” the convergence of the Spanish gasoline

retail price, which was well above that in Europe at the beginning of the period, towards the

European average price The Spanish government chose EU average price as the “competitive

benchmark”. Also, the Spanish retail margin converged toward the European one. Moreover,

retail prices reacted symmetrically to increases and decreases of the spot price of gasoline.

262

However, once the ceiling price regulation was abolished, the “collaboration” between the

government and the major operators, Repsol-YPF and Cepsa-Elf to control the inflation rate

resulted in a slower rate of increase (decrease) of gasoline retail prices when gasoline spot

prices went up (went down) than elsewhere in the European Union.

Finally, the acid test from the consumers’ point of view, retail margins were by the end of the

period of analysis, as in the first years after the abolition of the state monopoly, well above

the average in other European nations.

Source: https://addi.ehu.es/bitstream/10810/5645/1/2006.02.pdf

Fig 7_Spain_2

A recent study of the Spanish motor fuel market has been conducted by Konrad Benze at the

University of the Basque Country under the supervision of María Paz Espinosa, Ph.D.

and Aitor Ciarreta Antuñano, Ph.D. This showed that VAT was set at a rate of 21.00% across

Spain this having increased from 18.00% in consequence of the Euro crisis and its effect on

other tax receipts in Spain. In the Canary Islands the VAT rate is reduced to 7.00%.

Source: www.eapmaster.org/docs/Master_thesis_Konrad_Benze.pdf

Sweden

A breakdown of the market share enjoyed by the various operators in the Swedish motor fuel

https://addi.ehu.es/bitstream/10810/5645/1/2006.02.pdf

http://www.eapmaster.org/docs/Master_thesis_Konrad_Benze.pdf

263

market is given below:

B ilia

1.5%

B ilis te n

2.8% D a lv ik O il

1.0%

D in - X

4.6%

J e t

4.8%

O K -Q 8

25.3%

P re e m

13.3%P u m p / G u lf

1.7%

Q -S ta r

9.9%

S h e ll

11.2%

S T 1

7.2%

S ta t o il

16.7%

Source: Adapted from

http://spbi.se/statistik/forsaljningsstallen/

Swedish Petrol MarketPercentage Share of Sites 2012

fig 7_Sweden_1

There are no supermarket sites at present in Sweden due to a national veto on their operation.

Sweden provides a subsidy to commercial service providers in rural areas most commonly for

the supply of food and the supply of petrol. The subsidy can be up to 50% of the investment

needed, or 85% of the cost of compliance with regulations relating to the supply of food.

Sweden also provides a transport subsidy to businesses located in rural areas of from 5% to

45% of the transportation cost, either by road or by rail. To qualify a minimum journey of

251 km per delivery is needed. Sweden applies duty on Diesel at rates from 57.299 ppl to

62.138 ppl. All classes motor fuels used on the road see an additional VAT charge of 25.00%

added on top. A lower rate of duty is charged on gasoil for commercial (non-road) use.

Sweden also has a sulphur tax which doesn’t apply to modern motor fuels as they all fall

below the 5.00% sulphur content threshold. Sweden also has a reduced rate of duty on gasoil

used for farm vehicles (37.235 Euro Cents/Litre) and for agricultural purposes other than as a

propellant for vehicles (13.844 Euro Cents/Litre).

Source: http://ec.europa.eu/taxation_customs/index_en.htm# (page 21)


264

A diagram showing the change in the retail network in Sweden is given below:

4089

4039

4046

3930

3884

3839

3816

3701

3586

3245

2937

2885

2786

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

0

1

2

3

4

5Th

ousa

nds

Source: Adapted from http://spbi.se/statistik/forsaljningsstallen/

Sw edish Service StationsC h a n g e f ro m 2 0 0 0 t o 2 0 1 2

fig 7_Sweden_2

National measures to control pollution and congestion in the EU

This chapter has already looked at EU measures to control pollution and congestion in some

Detail. In this shorter section, we will look briefly at national measures to tackle pollution

and congestion.

United Kingdom

The UK Government has implemented a national Air Quality Strategy aimed at dealing with

eight pollutants known to be prejudicial to human health. In Scotland, this Air Quality

Strategy is a devolved matter to be dealt with by the Scottish Parliament. They in turn require

local authorities in Scotland to implement Local Air Quality Management (LAQM).

The following table shows each of the main pollutants being targeted by the government, the

main source of each pollutant, the target level set for each, and the date by which this target

was expected to be met.

265

Pollutant Main Sources Objective Target Date

Benzene Petrol Vehicles 5 parts per billion

running annual mean

31 Dec 2003

1,3-butadiene Road Transport 1 ppb

(running annual

mean)

31 Dec 2003

Carbon Monoxide Petrol Vehicles &

Industry

10 ppm

(running 8 hour

mean)

31 Dec 2003

Lead Petrol Vehicles &

Industry

0.5ug/m3 (annual

mean)

0.25ug/m3 (annual

mean)

31 Dec 2004

31 Dec 2008

Nitrogen Dioxide Road Transport &

Power Generation

105ppb (1hr mean

not to be exceeded >

18 times pa)

21ppb (annual mean)

31 Dec 2005

31 Dec 2005

Particulate Matter

(PM10)

Road Transport,

Power Generation &

Industry

50ug/m3 (1hr mean


35 times pa)

40ug/m3

(annual

mean)

31 Dec 2004

31 Dec 2004

Sulphur Dioxide Power Generation &

Industry

350ug/m3 (1hr mean


24 times pa)

125ug/m3 (24hr mean


3 times pa)

266ug/m3 (15 min

mean not to be

exceeded > 35 times

pa)

31 Dec 2004

31 Dec 2004

31 Dec 2005

Table 7.3 Source: Adapted from DETR (2000) Working Together for Clean Air

The above measures are required to meet the UK’s commitments as part of the European

programme to improve air quality. A further set of targets relate to Greenhouse gases.

The UK’s strategy to reduce the environmental impact of greenhouse gases resulting from

transport was set out in the DETR’s UK Climate Change Programme consultation paper. This

set out actual levels and projected levels for greenhouse gases as follows:

266

Pollutant Sector

(MtC equivalent)

1990

Sector

(MtC equivalent)

2000 (Est)

Sector

(Mtc

equivalent)

2010 (Est)

Carbon Dioxide 38 40 40

Methane 0.2 0.1 0.1

Nitrous Oxide 0.4 1.2 1.8

Hydroflurocarbons 0.01 0.04 0.09

Perflurocarbons 0 0 0

Sulphur Hexafluoride 0 0 0

Total 39 41 42

Table 7.4 Source: Adapted from DETR (1998) UK Climate Change Programme, Consultation Paper, Pages 31-32.

It is clear from the above table that the government anticipated the level of emissions from

road transport would continue to rise. The measures shown in the table below were methods

identified to reverse this trend. The first item in the chart is the fuel duty escalator which the

government now intend to increase on a year by year basis rather than at an automatic 6%pa

above inflation. It will be clear from comments which we have already made that we do not

think

that the fuel duty escalator has had any impact on congestion levels.

Consequently, whilst its abandonment has had an impact on government income, it won’t

adversely affect attempts to reduce congestion. The measure did not do what the government

hoped. Its temporary, partial, abandonment is therefore a welcome development, given the

regressive nature of the tax, and the adverse impact it had in terms of social inclusion in rural

areas. We hope it may yet be permanently, totally, scrapped.

As was seen above, a series of targets were set out for the reduction of air pollution. How

have

we got on with meeting these targets?

Changes in Pollution Levels 1990-2011

ammonia are estimated at 290kt in 2011. These emissions have declined by

19% since 1990. Agricultural sources dominate the inventory with manure management

representing 61% of total ammonia emissions in England in 2011 and 33% coming from

cattle manure management alone. Ammonia emissions have increased in recent years, with a

267

3% increase between 2008 and 2011 driven by higher emissions from fertiliser application

and increasing emissions from composting and biogas production via anaerobic digestion.

carbon monoxide are estimated at 2.14Mt in 2011 and have declined by

76% since 1990. In 2010, 38% of England’s emissions stem from road transport combustion

sources.

nitrogen oxides are estimated at 1.03Mt in 2011. Emissions have declined by

61% since 1990, with 36% stemming from road transport combustion sources and 23% from

power generation both in England.

non-methane volatile organic compounds are estimated at 750kt in 2011,

representing a 62% reduction in emissions since 1990. This reduction has been dominated by

the 95% decrease since 1990 in road transport sources in England, including evaporative

losses.

PM10 are estimated at 113kt in 2011 and have declined by 58% since 1990.

23% of English emissions come from road transport sources. Power generation accounted for

28% in England in 1990 but have been significantly reduced to 6% of England’s total in

2011.

sulphur dioxide are estimated at 380kt in 2011. Emissions have declined by

90% since 1990, which has been dominated by the 95% reduction in power generation due to

the growth in gas and nuclear fuel use and the installation of FGD plant at a number of coal-

fired power stations.

lead are estimated at 58.6t in 2011. Emissions have declined by 98% since

1990. The decline is dominated by the 1,799t reduction in transport sources in England due to

the phase-out of leaded petrol. 30% of England’s 2011 emissions arise due to the production

in iron and steel industries.

Source: http://naei.defra.gov.uk/overview/pollutants

http://naei.defra.gov.uk/overview/pollutants

268

Emissions of air pollutants in the UK, 1990 to 2011

Source: https://www.gov.uk/government/publications/emissions-of-air-pollutants

One element of possible use has not been included below. This is a fiscal incentive to scrap

older

and/or more polluting Vehicles. According to the RAC (1994) in London 10% of cars

produce

44% of the pollution. In light of this finding, a scheme to scrap older vehicles would seem to

be

money well spent. It would seem equally as valid as supporting the conversion of new or

nearly

new cars to run on LPG.

Possible

Measure

Carbon Saving

(MtC)

Cost

(per tC)

Benefit

6%pa Fuel Duty Escalator to

2002

2-5 Reduced congestion ?

Achieve EU target for CO2

from Cars (car manufacturers

to do)

5-8 Higher car price Reduced pollution

Local Transport Measures (full

take up in conurbations >

25km2)

0.8 Less congestion

Less pollution

Year

Sulphur dioxide

(Million tonnes)

Nitrogen oxides

(Million tonnes)

Non-methane

volatile organic

compound (Million

tonnes)

Ammonia

(excluding natural

sources)

(Thousand tonnes)

PM10 (Thousand

tonnes)

PM2.5 (Thousand

tonnes)

1990 3.71 2.87 2.70 354 272 153

1991 3.55 2.76 2.63 361 270 153

1992 3.47 2.70 2.55 348 261 150

1993 3.13 2.53 2.43 342 250 146

1994 2.66 2.42 2.34 345 238 141

1995 2.36 2.30 2.16 337 214 130

1996 2.01 2.19 2.08 338 210 128

1997 1.65 2.02 1.97 345 204 129

1998 1.63 1.96 1.82 333 191 116

1999 1.25 1.85 1.63 334 183 111

2000 1.23 1.78 1.50 323 170 103

2001 1.13 1.74 1.41 321 164 100

2002 1.02 1.67 1.33 314 142 90

2003 0.99 1.64 1.21 304 140 88

2004 0.83 1.59 1.12 309 137 85

2005 0.70 1.57 1.05 304 134 84

2006 0.65 1.52 1.00 303 133 82

2007 0.57 1.45 0.97 292 130 80

2008 0.49 1.31 0.89 279 126 76

2009 0.39 1.14 0.80 281 115 70

2010 0.41 1.11 0.77 286 116 70

2011 0.38 1.03 0.75 290 113 67

https://www.gov.uk/government/publications/emissions-of-air-pollutants

269

Local Transport Measures (take

up in London & 1/3

conurbations > 25km2)

0.3 Less congestion

Less Pollution

Differentiated VED Smaller engine size

Changes to Company Car Tax

regime

Less miles driven

Enforce 70mph speed limit 0.4-2.8 Better fuel economy

Local Transport Plan -

1. Bus quality

partnerships

2. Traffic management &

calming

3. Road user charges

4. Parking charges

5. Freight quality

partnerships

6. Cycle paths / walkways

More bus usage

Reduced congestion

Reduced congestion

Less private car use

Reduced congestion

More

cycling/walking

Business green transport plan Less miles driven

EC Fuel consumption labelling Less Pollution

Switch to LPG / LPG

conversion

>£1000

Per car

Less pollution

Table 7.5 Source: Adapted from DETR (1998) UK Climate Change Programme, Consultation Paper, Page 16.

Many of the above schemes originate with the EU, and will continue to improve air quality

over time. However, some schemes rely on local authority implementation, and these are

likely to prove politically challenging for councillors imposing parking charges, for example.

It is to be hoped that Local Transport Plans don’t become political footballs.

In recent years the UK Government introduced a “Scrappage” scheme to encourage people to

scrap old vehicles and replace them with new vehicles with lower emissions. This counter-

cyclical scheme employed at the height of the post 2008 financial crash was of great

assistance in helping the motor vehicle manufacturing industry avoid even higher

redundancies.

Greece

Greece took advantage of a post accession derogation from the requirement to comply with

an EU Directive on scrapping the use of Leaded Petrol. Greece was given until 2005 to

comply with the Directive, most EU countries had to have implemented by 1st January 2000.

270

The following diagrams (figs 7.15-7.24) show the levels of a variety of pollutants in Greece.

These figures are adapted from tabulated statistics compiled by the European Environment

Agency.

Carbon Dioxide Emissions from transport are on an upward trend in Greece. In 1998, 19.5

million tonnes of Carbon Dioxide emissions were generated by transport activities in Greece.

By 2009 this figure had risen to 25.3 million tonnes an increase of just under 30%. Transport

represented 19.5% of all recorded CO2 emissions in Greece in 1998. Transport’s share rose in

the following years to reach 23.8% in 2013. Nitrogen Oxide Emissions from transport in

1998 were 184,820 tonnes, with the emissions generated from transport accounting for 52.5%

of all NOx produced in Greece in that year. By 2010 emissions had fallen to 150,500 tonnes

which was a 46.8% share of Greek NOx. Carbon Monoxide emissions are falling, 964,530

tonnes came from the transport sector in 1998, representing 71.0% of all CO emissions in

Greece in the period.

By 2010 emissions had fallen to 326,580 tonnes which was a 61.2% share of Greek

emissions. Sulphur Dioxide emissions rose sharply in 2009. Prior to that, in the period from

1999, they had generally been falling. The transport sector accounted for 45,280 tonnes of

sulphur emissions in 1998, representing 8.5% of all Greek emissions of SO2 in the period.

This figure had fallen to 34,350 tonnes in 2010, but represented a higher share of 12.9% of

Greek SO2.NMVOC Emissions from transport peaked in 1998 at 194,530 tonnes representing

55.4% of all Greek NMVOC emissions in the period. Since then there has been a huge

reduction to 47,630 tonnes in 2010. This represents 25.8% of Greek NMVOC emissions in

2010.Greece charges VAT at a rate of 23% on motor fuels up from 18% in 2000. For public

passenger transport a reduced rate of 8% applies. Travel within & between certain Greek

islands is also granted a lower rate of 6%. Source: European Commission: http://europa.eu.int/comm/environment/enveco/env_database/greece2000.pdf

and http://ec.europa.eu/energy/observatory/oil/bulletin_en.htm

http://europa.eu.int/comm/environment/enveco/env_database/greece2000.pdf

http://ec.europa.eu/energy/observatory/oil/bulletin_en.htm

271

In July of 2000, the Duty Rates applied nationally to fuels were as set out in the following

Table which is updated to show the present position:

Motor Fuel Tax Per Litre

(Euro Cents)

July 2000

Tax Per Litre

(Euro Cents)

March 2013

Euro super 95 (Unleaded Petrol) 29.106 67.000

Automotive Gas Oil (Diesel) 24.651 33.000

LPG 10.098 33.000

Table 7.6 Source: (1) Bulletin Petrolier (July 2000) Duties & Taxes, Brussels, DG Energy & Transport and

(2) Bulletin Petrolier (04/03/13) http://ec.europa.eu/energy/observatory/oil/bulletin_en.htm

(3) EC DG Taxation (2013) Excise Duty Tables, Part II – Energy Products and Electricity


For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_2013

In addition to measures mentioned above, the Greek government have from time to time

banned traffic from entering the centre of Athens, in order to control levels of pollution. In

addition, in the early 1990’s, Greece operated a policy to scrap older cars which has helped to

keep urban pollution levels below where they otherwise might have been.

Due to the rapid rate of development of the Greek economy, the previous low levels of car

ownership in comparison with other EU member states have seen significant catch-up prior to

the crash. Greece was given permission to increase CO2 emissions by 30% from the 1990

baseline by 2010. Other than for CO2 most emissions are projected to fall in future years in

Greece. Source: European Commission - Standard & Poor’s DRI - KULeuven (1999) Auto Oil II Cost Effectiveness

Study, Part III: The Transport Base Case, Annex B.4: Greece, Table 22, Page 19.

Circulation Tax (the tax disc) in Greece is based on engine size in cc’s as follows:



http://www.acea.be/news/news_detail/acea_tax_guide_2013

272

Engine Size Annual Circulation Tax (Euros)

Up to 50 cc Nil

From 51 cc to 300 cc 22 Euros









From 3001 cc to 4000 cc 1,100 Euros

From 4001 cc and above 1,320 Euros

Table 7.7 Source: http://livingingreece.gr/2012/12/28/road-tax-greece/

Tax on registration of new cars is also graded to take account of engine size and whether or

not the vehicle has pollution abatement technology installed. Passenger cars registered for the

first time in Greece on or after November 1, 2010 are also assessed a ‘green fee’, according

to

grams of carbon emissions (CO2) per kilometer:

0 – 100 (g/km): None

101 – 120 (g/km): 0.90 euros

121 – 140 (g/km): 1.10 euros

141 – 160 (g/km): 1.70 euros

161 – 180 (g/km): 2.25 euros

181 – 200 (g/km): 2.55 euros

201 – 250 (g/km): 2.80 euros

251 and above (g/km): 3.40 euros

Source: http://livingingreece.gr/2012/12/28/road-tax-greece/#ixzz2ethsOpWy

http://livingingreece.gr/2012/12/28/road-tax-greece/

http://livingingreece.gr/2012/12/28/road-tax-greece/#ixzz2ethsOpWy

273

fig (7.15)

fig (7.16)

274

fig (7.17)

fig (7.18)

275

fig (7.19)

fig (7.20)

276

fig (7.21)

fig (7.22)

277

fig (7.23)

fig (7.24)

278

Austria

Austria ended the use of Leaded Petrol in line with the EU’s December 1999 deadline.

It levies VAT at the rate of 20% on all current motor fuels. The following table sets out the

duty rates – Mineralölsteuer - applied nationally to motor fuels:

Motor Fuel Tax Per Litre/kg

(Euro Cents) 2000

Tax Per Litre/kg

(Euro Cents) 2013



Liquefied Petroleum Gas (LPG) 13.900 26.100






Between 1991 and 2010, Austria reduced transport related CO emissions from 717,890

tonnes to 161,960 tonnes a drop of 77%. In 2010, 25.4% of CO emissions came from

transport sources.

In 2010, Austria produced 22,205,420 tonnes of CO2 emissions from transport sources,

representing 32.4% of all CO2 emissions. Carbon Dioxide emissions were on an upward trend

in Austria and peaked in 2005. The target set by the EU for CO2 emissions in Austria was for

a reduction of 25% from the 1990 baseline figure by 2010. In reality emissions ended up 61%

higher in 2010 than in 1990. NOx emissions from transport have fallen from a peak of

156,670 tonnes in 2003 to 111,620 tonnes in 2010. Transport represents 59.6% of Austria’s

total NOx emissions. SO2 emissions in Austria have fallen from a peak of 6,550 tonnes in

1994 to 210 tonnes in 2010, a reduction of almost 97% over the period. Transport represents

1.1% of total SO2 emissions in Austria. NMVOC emissions have also fallen, down from

73,490 tonnes in 1991 to 13,100 tonnes in 2010. Transport represents 9.9% of Austria’s

NMVOC emissions. More detailed information for each of these pollutants can be found on

the attached graphs (figs 7.25 – 7.34).




279

Vehicle Excise Duty in Austria is based on engine power.

Vehicle Size Annual Road Tax

(Euros) 2013

Motorcycles 0.264xCC’s

Up to 3.5 tonnes Min €66 - Max€720

3.5 tonnes - 7.5 tonnes Min €180 - Max€139.5

7.5 tonnes - 12 tonnes Min €139.5 - Max€223.2

12 tonnes - 18 tonnes Min €223.2 - Max€367.2

>18 tonnes Min €410.4 - Max€720

Table 7.9 Source:

(1) Adapted from ACEA Tax Guide 2012

The sales tax on motor vehicles is based on fuel efficiency, thus providing an incentive to

choose a vehicle with low fuel consumption. This has resulted in diesel vehicles increasing

market share in Austria from 20% in 1992 to a present rate of over 50%.

Austria also levies a charge for road use, through the vignette, this applies to vehicles up to

3.5 tonnes in weight. Heavier vehicles pay a charge based on electronic road toll charges for

lorries based on distance travelled and recorded by a GO-BOX.

Military vehicles, street cleaning vehicles, tractors and emergency vehicles are exempt from

the charges. An exemption from the duty on LPG used for local public transport was

abolished on 1st January 2013.

280

fig (7.25)

fig (7.26)

281

fig (7.27)

fig (7.28)

282

fig (7.29)

fig (7.30)

283

fig (7.31)

fig (7.32)

284

fig (7.33)

fig (7.34)

285

Belgium

Belgium ended the use of leaded petrol in line with the EU deadline of 31/12/1999. It

currently charges VAT at a rate of 21% on all motor fuels. Belgium has a Nil rate of duty on

LPG used as propellant. This is an exemption under Article 15 (1) I of Directive 2003/96/EC.

A reduced rate of duty is charged on diesel where at least 5% of the fuel by volume is Fatty

Acid Methyl Ester (FAME). Duty is levied in accordance with the following table of national

rates, inclusive of Energy Tax:


(Euro Cents) 2000

Tax Per Litre/kg

(Euro Cents) 2013



LPG (Exempt) - -






Transport accounted for 58,750 tonnes of Carbon Monoxide emissions in Belgium in 2010.

This continued a long downward trend in CO emissions which were 675,240 tonnes in 1990.

In 2010, transport accounted for 12.8% of Belgian CO emissions down from 49.0% in 1990.

Carbon Dioxide emissions in Belgium are on an upward trend. In 1990, 20,098,800 tonnes of

CO2 emissions were recorded. By 2010 this figure had increased to 26,598,610 tonnes. The

target set for Belgium by the EU was for a reduction of 10% in CO2 emissions from the 1990

baseline by 2010. What Belgium delivered was a 32.3% increase. Transport accounted for

22.8% of Belgian CO2 emissions in 2010 up from 17.3% in 1990.

Belgian NOx emissions have been falling and are down from 210,930 tonnes in 1990 to

116,440 tonnes in 2010. This represented 53.4% of such emissions in Belgium for 2010

(1990 = 53.2%).

SO2 emissions were also falling, down from 15,270 tonnes in 1990 to 1,460 tonnes in 2010.




286

This amounted to 2.2% of Belgian emissions in 2010 (1990 = 4.2%).

NMVOC emissions fell from 95,750 tonnes in 1990 down to 9,750 tonnes in 2010. This

represents a fall of 89.8%. Transport accounts for 6.3% of NMVOC emissions in Belgium.

Vehicle Excise Duty is levied according to engine power, using cylinder capacity (cc) for

cars and weight for lorries, vans and buses. Charges range from 52 Euros to 1,318 Euros per

Annum. LPG powered cars have a levy of between 89.2 Euros and 208 Euros per annum.

Sales tax on new vehicles is levied in accordance with engine power. The tax is levied on a

sliding scale from 62 Euros for 0-70kW to 4958 Euros for engines exceeding 155kW.

Road use tax is charged on lorries exceeding 12 tonnes in weight. The tax is based on the

number of axles and is levied on local and foreign vehicles. The charge varies from 750

Euros to 1,250 Euros per annum. Exempt vehicles are those used for the purposes of national

defence, civilian protection, fire services etc. Fuels used for agriculture, forestry and fishing

are exempt from excise duty.

Source: (1) http://europa.eu.int/comm/environment/enveco/env_database/belgium2000.pdf (2) and Bulletin Petrolier (04/03/13)

(3) Adapted from ACEA Tax Guide 2012

287

fig (7.35)

fig (7.36)

288

fig (7.37)

fig (7.38)

289

fig (7.39)

fig (7.40)

290

fig (7.41)

fig (7.42)

291

fig (7.43)

fig (7.44)

292

Denmark

Denmark charges VAT on Motor Fuels at a rate of 25%, this along with Sweden, is the

highest rate in the EU. Use of Leaded Petrol carries a duty rate of 68.876 €c per litre.

The rates of duty charged on various motor fuels are as given in the table below:


(Euro Cents) 2000

Tax Per Litre/kg

(Euro Cents) 2013









Public transport providers are able to reclaim 100% of the duty charged.

Carbon Monoxide emissions from transport in Denmark have fallen from 466,880 tonnes in

1990 to 115,320 tonnes in 2010. Emissions of CO from transport represent 28.7% of the

national total in 2010 (1990 – 64.8%).

Transport’s CO2 emissions amounted to 10,528,210 tonnes in 1990 with the transport sector

accounting for 20.7% of national CO2 emissions in Denmark. The EU agreed a target

reduction for CO2 emissions in Denmark of 25% from the 1990 baseline figure by 2010. The

actual outcome by 2010 was a rise in CO2 emissions from transport to 13,335,570 tonnes, an

increase of 26.7% on 1990 with transport accounting for 27.7% of Denmark’s CO2 emissions

in 2010.

NOx emissions from transport in Denmark peaked at 125,270 tonnes in 1991, and have

subsequently fallen, reaching a level of 58,290 tonnes in 2010. Transport accounted for

45.5% of NOx emissions in Denmark in 1990. By 2010 this had fallen to 28.7%.

Sulphur Dioxide emissions from transport in Denmark have fallen dramatically from 11,680

tonnes in 1990 to 1,690 tonnes in 2010, a drop of 85.5% over the period. Transport accounted




293

for 6.6% of SO2 emissions in Denmark in 1990. By 2010 Transport’s share was 11.2%.

NMVOC emissions from Transport are also down, from 83,680 tonnes in 1990 to 14,220

tonnes in 1997. Transport represents 16.3% of all NMVOC emissions in Denmark in 2010

down from a figure of 43.7% in 1990.

Duty figures shown in figure 7.11 above include Excise Tax, Carbon Dioxide Tax and

Sulphur Tax, all of which are levied in Denmark.

From 1st July 1997, a new system Vehicle Excise Duty in Denmark was introduced for cars,

based on fuel consumption, giving an incentive to purchase fuel efficient vehicles. For a car

travelling over 20kms per litre of petrol the present minimum charge is approx. €75 per

annum. The present charge for vehicles travelling under 4.5kms per litre of petrol is €2,591

per annum. Different rates are charged for diesel engined cars (which must also pay an annual

registration charge of 1,000 Danish Kroner) ranging from approx €21.46 for vehicles

travelling more than 32.1 kms per litre of diesel to a maximum of approx. €3,477 per annum

unable to manage more than 5.1kms per litre.

Vehicles not subject to the above tax are charged one based on vehicle weight.

Denmark has a low percentage of people owning a car (<40%). The main reason for this is

the Sales Tax levied on new cars. The tax is levied in two stages; stage one of the tax levies

105% of the purchase price of the car (including VAT) up to approx 10,600 Euros, and stage

2 levies a tax of 180% on the remainder of the car’s value. This adds hugely to the import

price of the car.

Road tolls are also levied on lorries over 12 tonnes in weight. For HGV’s with up to three

axles, the charge is currently 750 Euros. For larger vehicles, the charge is 1,250 Euros in

2013.

These figures don’t appear to have changed in over a decade.

Source: http://europa.eu.int/comm/environment/enveco/env_database/denmark2000.pdf

294


fig (7.45)

fig (7.46)


295

fig (7.47)

fig (7.48)

296

fig (7.49)

fig (7.50)

297

fig (7.51)

fig (7.52)

298

fig (7.53)

fig (7.54)

299

Finland

Finland levies VAT on motor fuels at a rate of 24%. Use of leaded petrol has been phased out

in accordance with EU requirements. Duty is charged at the rates given in the following table:


(Euro Cents) 2000

Tax Per Litre/kg

(Euro Cents) 2013



Liquefied Petroleum Gas (LPG) 0






Carbon Monoxide emissions from transport in Finland have fallen from a level of 543,160

tonnes in 1990 to 265,640 tonnes in 2010. Transport accounts for 56.1% of Finland’s CO

emissions in 2010 down from 67.5% in 1990.

Carbon Dioxide emissions from transport rose to 13,355,740 in 2010 up from 12,517,110

tonnes in 1990. Finland had a target of keeping CO2 levels at the 1990 baseline figure in the

period to 2010 but the increase over the period was 6.7%. Transport accounted for 32.2% of

all Finnish Carbon Dioxide emissions in 2010 up from 30.9% in 1990.

Nitrogen Oxide emissions from transport have been declining in the period from 1990 to

2010. In 1990, emissions were 155,860 tonnes, falling to 63,840 in 2010. Transport

accounted for 36.1% of all NOx emissions in Finland in 2010, down from 52.8% in 1990.

The most dramatic fall in transport emissions in Finland in recent years is from Sulphur

Dioxide. SO2 levels have fallen from 7,680 tonnes in 1990 to 1,180 tonnes in 2010. This

represents a fall of some 84.6% over the period. Transport now accounts for only 1.8% of

Sulphur Dioxide emissions in Finland.

NMVOC emissions have also fallen over the period, although less swiftly than for SO2. In

1990, NMVOC emissions were 86,660 tonnes, and by 2010, these had fallen to 31,580




300

tonnes. Transport accounted for 50% of Finnish NMVOC emissions in 1997. This figure had

fallen to 27.4% by 2010.

Finland does not have any LPG powered vehicles according to the European Commission’s

Auto-Oil II Cost-effectiveness Study. Source: European Commission (1999) Standard & Poor’s DRI - KULeuven Auto-Oil II Cost-effectiveness

Study, Part III: The Transport Base Case, Annex B.1: Finland.

Whatever the accuracy or not of this claim, Methane and LPG in Finland are exempt from

excise duty for all uses. This approach was accepted by the EU in Council Decision

92/510/EEC and is also covered in Council Directive 2003/96/EC.

In addition to Excise Duty, Finland also have a Carbon Tax on all motor fuels and a Sulphur

Tax on Diesel. Vehicle Excise Duty (the Tax Disc) for passenger cars in Finland is between

€43.07 and €606.26 per annum. The Sales Tax on new cars is based on a percentage of the

taxable value.

The rates applicable at present are:

For new cars rates are between 12.2% and 48.8% of Common Retail Value.

For second hand cars imported into Finland rates between 5% and 50% are applied.

301

fig (7.55)

fig (7.56)

302

fig (7.57)

fig (7.58)

303

fig (7.59)

fig (7.60)

304

fig (7.61)

fig (7.62)

305

fig (7.63)

fig (7.64)

306

France

France has eliminated the use of Leaded Petrol. Currently motor fuels attract a rate of VAT

of 19.6%. Excise Duty on motor fuels is in accordance with the figures given in the following

table:


(Euro Cents) 2000

Tax Per Litre/kg

(Euro Cents) 2013


Lead Substitute Petrol (LRP) 63.968 63.960








Carbon Monoxide emissions in France are on a steadily downward trend. In 1990, CO

emissions from transport were 6,406,890 tonnes. By 2010, emissions had fallen to 889,460

tonnes, a reduction of 86.1% over the period. In 2010, 20.4% of French CO emissions came

from the transport sector down from 55.8% in 1990.

Carbon Dioxide emissions from the transport sector in France are rising. In 2010 they were

132,001,580 tonnes up from 118,002,330 in 1990. The target for France set by the EU is for

emissions of CO2 to be kept at the 1990 baseline level in 2010. In actual fact, transport

emissions were up by 11.9% over the period. Transport accounted for 37.5% of French CO2

emissions in 2010 up from 33.1% in 1990.

NOx emissions from transport in France were 1,223,550 tonnes in 1990. Since then, levels

have fallen to reach 642,420 tonnes in 2010, a reduction of 47.5%. In 2010 transport

emissions accounted for 54.2% of all NOx emissions in France, down from 63.6% in 1990.

SO2 emissions from transport in France have fallen from 150,140 tonnes in 1990 to reach

5,260 tonnes in 2010, a fall of 96.5% over the period. In 2010, transport accounted for 1.76%




307

of French Sulphur Dioxide emissions, down from 11.0% in 1990.

NMVOC emissions from transport in France have fallen from 1,112,960 tonnes in 1990 to

160,210 in 2010, a fall of 85.6%. Transport accounted for 7.7% of all French NMVOC

emissions in 2010, down from 28.8% in 1990.

VAT was reduced in France from 20.6% to 19.6% in April 2000 where it remains to this day.

There is a Registration Tax levied in France – the Grey Card - which is set by region and

varies between €27.0 and €51.2 depending on where in France you are.

Vehicle Excise Duty (road tax disc) varies dependent on the car type, whether it complies

with EU emission level requirements, the age of the vehicle, and also the Department of

France that you happen to live in. This tax is levied and collected by the Department and not

by central government. Company cars are subject to a supplementary charge.

A road charging scheme is operated in France for HGV’s, based on a charge per km. The

most recent rate found was 0.14 Euros per km.

The Sales Tax on new cars is set dependent upon type of car, engine capacity and power.

This tax is also collected by Departments rather than centrally.

France introduced a Bonus/Malus scheme in 2008 whereby people buying a new car receive a

bonus from the government. People buying second hand cars - au contraire – are required to

pay a tax (malus) to compensate the sate for the damage caused.

Sources:

(1) http://europa.eu.int/comm/environment/enveco/env_database/france2000.pdf

(2) European Commission (1999) Standard & Poor’s DRI - KULeuven Auto-Oil II Cost-effectiveness Study,

Part III: The Transport Base Case, Annex B.2: France.

308

fig (7.65)

fig (7.66)

309

fig (7.67)

fig (7.68)

310

fig (7.69)

fig (7.70)

311

fig (7.71)

fig (7.72)

312

fig (7.73)

fig (7.74)

313

Germany

Germany has eliminated the use of leaded petrol in accordance with EU requirements. VAT

on motor fuels is charged at a rate of 19%. Excise Duty is levied in accordance with the rates

shown in the table below:


(Euro Cents) 2013

Tax Per Litre/kg

(Euro Cents) 2000

Lead Replacement Petrol 72.100 56.242

Unleaded Petrol (>10mg/kg) 66.980 56.242

Unleaded Petrol (<=10mg/kg) 65.450 56.242

Gas Oil (Diesel) (>10mg/kg) 48.570 37.836

Gas Oil (Diesel) (<=10mg/kg) 47.040 37.836





http://ec.europa.eu/taxation_customs/taxation/excise_duties/energy_products/rates/index_en.htm


Carbon Monoxide emissions from transport in Germany fell from 6,629,860 tonnes in 1990

to 1,016,280 tonnes in 2010 a fall of 84.7%. In 2010, transport accounted for 30.59% of

German CO emissions down from 54.4% in 1990. From 1990 to 1999 Carbon Dioxide

emissions were on an upward trend. CO2 emissions from transport were 162,611,240 tonnes

in 1990, but had risen to 184,591,550 tonnes in 1999 falling subsequently to reach

153,271,620 tonnes in 2010.

Germany was set a target of reducing CO2 emissions from the 1990 baseline level by 25% by

2010. In the event, despite the recession at the end of the period Germany only managed a

5.74% reduction in transport emissions over the period. In 2010, transport accounted for

18.3% of Carbon Dioxide emissions, up from 16.0% in the baseline year of 1990.

Nitrogen Oxide emissions fell from 1,497,720 tonnes in 1990 to 595,690 tonnes in 2010.

Transport accounted for 45.1% of German NOx emissions down from 51.8% in 1990.

Sulphur Dioxide levels from transport have fallen dramatically. In 1990, transport produced


http://ec.europa.eu/taxation_customs/taxation/excise_duties/energy_products/rates/index_en.htm


314

105,490 tonnes of SO2 with the 2010 figure showing 1,490 tonnes, a fall of 98.6%. In 2010,

transport accounted for 0.3% of German Sulphur Dioxide emissions down from 1.95% in

1990.

NMVOC emissions from transport in Germany fell from 1,435,240 tonnes in 1990 to 128,860

tonnes in 2010. Transport accounted for 12.3%of NMVOC emissions in Germany in 2010

down from 37.9% in 1990.

LPG used for public transport is no longer taxed at a lower rate than that in general use.

Methane is also used for road transport, for general use this is taxed at a rate of 13.9 Euros

per Mwh.

Public transport use saw this rate reduced in 1990 but as with LPG the reduction had been

removed by 2013. Rates of Vehicle Excise Duty (road tax disc) are dependent on a base rate

from engine power in cc’s and a second element based on pollutant emission levels. Tax free

emission levels have been falling over time from 120g per km in 2009 to 95g per km

travelled today. Above this tax free limit vehicles are charged €2 per gram of CO2per km.

Tax rates for engine power are higher for diesel cars (9.5 per 100 cc’s) than for petrol driven

vehicles (2.0 per 100cc’s), in part compensation for the lower rate of Excise Duty on diesel.

Sales Tax on new cars amounts to a small registration charge, presently €26.30 per vehicle.

Lower sulphur fuels attract a lower rate of excise duty for both petrol and diesel where the

sulphur content is less than 10mg per kg. Germany introduced road pricing for trucks in

2002. This replaced the Euro vignette scheme. The rates for the scheme are between €14.1

Euros per 100kms and €28.8 Euros per 100kms dependent on axles and emissions. Road

Tolls in Germany are paid by trucks over 12 Tonnes both domestic and foreign.

Source: http://www.dw.de/an-end-to-free-roads-in-germany/a-17197613

Electric Vehicles receive a VED exemption for the first five years and a 50% reduction

thereafter. It is hoped the exemption will be extended to 10 years in future.

http://www.dw.de/an-end-to-free-roads-in-germany/a-17197613

315

fig (7.75)

fig (7.76)

316

fig (7.77)

fig (7.78)

317

fig (7.79)

fig (7.80)

318

fig (7.81)

fig (7.82)

319

fig (7.83)

fig (7.84)

320

Ireland

Ireland has eliminated the use of Leaded Petrol in accordance with EU instructions. VAT is

charged on existing motor fuels at a rate of 23%, up from 21% in 2000. Duty is charged on

motor fuels at rates shown in the following table:


(Euro Cents) 2000

Tax Per Litre/kg

(Euro Cents) 2013










Carbon Monoxide emissions from transport in Ireland fell from 305,650 tonnes in 1990 to

79,330 tonnes in 2010. Transport accounts for 57.0% of all CO emissions in Ireland in 2010.

Carbon Dioxide emissions in Ireland have been on a relatively steep upward curve, rising

from 5,039,390 tonnes in 1990 to a peak of 14,143,780 tonnes in 2007 since when they have

fallen back to 11,475,610 in 2010. This still represents an increase of 127.7% over the period.

CO2 emissions from transport represented 29.0% of all such emissions in Ireland in 2010.

Ireland had an EU target of not exceeding a 15% increase in CO2 emissions from the 1990

baseline by 2010.

In terms of transport emissions, the performance was laughable.

Nitrogen Oxide emissions from transport in Ireland were 48,500 tonnes in 1990, rising to a

peak of 64,810 tonnes in 1999 and subsequently falling back to 40,040 tonnes in 2010.

Transport accounted for 53% of all Irish NOx emissions in 2010. Transport accounted for

6,830 tonnes of Sulphur Dioxide emissions in Ireland in 1990. This level rose to a peak of

9,580 tonnes in 1998 before falling dramatically with the introduction of low sulphur fuels to




321

only 150 tonnes by 2010. Transport accounted for only 1.0% of Irish SO2 emissions in 1996.

NMVOC emissions from transport were 9,110 tonnes in 2010, down from 36,740 tonnes in

1990. In 2010, transport in Ireland accounts for 20.0% of all NMVOC emissions.

Ireland has reduced rates on excise duty for diesel for agricultural vehicles (10.228€c per

litre)for railway use (10.228€c per litre) and for fishing (5.631€c per litre). They also charge a

lower rate of VAT (13.5€c per litre) on these activities.

Ireland charges a Vehicle Registration Tax on both new vehicles and imported second hand

vehicles at rates ranging between 14% and 36% of the total cost price including taxes.

Commercial vehicles are subject to a similar charge at a rate of 13.3% of open market selling

price.

Vehicle Excise Duty (Road Tax) in Ireland is based on engine power (ccs) for private cars

registered before 30th

June 2008, and is based on weight for HGV’s. For cars of <1000cc ,

the rate of VED is €185 per annum. For cars >3000ccs, the rate is €1,683 per annum. There

are a variety of rates for vehicles in between. For cars registered since 1st July 2008 a variety

of rates are set based on carbon emissions ranging from €160 per annum to €2,258 per

annum.. Electric vehicles pay a VED at €157 per annum, up from €117 in Yr 2000.

Charges for goods vehicles are between €310 for vehicles up to 3 tonnes (Yr 2000 min charge

€190.5), and €4,833 (Yr 2000 - €2,984) for vehicles weighing more than 20 tonnes.

Ireland had one of Europe’s fastest growing rates of car ownership before the crash. The

reduction in emissions in recent years are a direct result of the recession.

322

fig (7.85)

fig (7.86)

323

fig (7.87)

fig (7.88)

324

fig (7.89)

fig (7.90)

325

fig (7.91)

fig (7.92)

326

fig (7.93)

fig (7.94)

327

Italy

The rate of VAT on motor fuels in Italy is 21% up from 20% in Year 2000.. Excise Duty on

motor fuels are charged at the rates shown in the following table:


(Euro Cents) 2000

Tax Per Litre/kg

(Euro Cents) 2013










Carbon Monoxide emissions from transport in Italy peaked at 6,144,990 tonnes in 1992.

From that point they have declined to reach 1,189,560 tonnes in 2010. Transport accounted

for 43.0% of Carbon Monoxide emissions in that year well down from 78.7% in 1997.

Carbon Dioxide emissions from transport have also fallen since the recession. In 1990,

101,268,850 tonnes of CO2 emissions were attributable to transport in Italy. This figure

continued to rise peaking at 127,215,490 tonnes in 2007. Since then emissions have fallen to

117,383,750 tonnes. This should be considered in light of the EU target set for Italy of

achieving a 7% reduction in CO2 emissions from the 1990 baseline by 2010. Italian CO2

emissions are just under 25% higher than the target set. In 2010 transport accounted for 32%

of Italy’s CO2 emissions down from 23.9% of all Carbon Dioxide emissions in Italy in 1998.

Nitrogen Oxide emissions in Italy from transport peaked in 1992 at 1,184,910 tonnes. By

2010 they had fallen to 595,780 tonnes. In 2010 transport accounted for 61.0% of NOx

emissions in Italy down from 65.7% in 1997. SO2 emissions from transport in Italy fell from

209,690 tonnes in 1990 to 23,210 tonnes in 2010. Transport accounted for 11% of Italy’s SO2

emissions in 2010 up from only 3.4% of Sulphur Dioxide emissions in 1997.

In Italy, NMVOC emissions from transport peaked at 1,211,970 tonnes in 1993. Since then,




328

they have fallen back steeply to 334,030 tonnes in 2010. In 2010 transport accounted for

31.0% of all Italian NMVOC emissions down from 58.4% in 1997.

Italy’s excise duty on petrol allows for a lower rate for agricultural use. There are also

reductions for the use of diesel in the farming, fishing and forestry sectors and for use in rail

transport.

There is a national vehicle Registration Tax on new (€125) and second hand (€75) vehicles.

A local vehicle registration tax is also levied which varies dependent on engine size in kW

with a base rate of €150.81 for cars up to 53kW with an extra €3.5119 per kW beyond this.

Higher rates of duty are charged for HGVs which increase according to the tonnage of the

vehicle.

Italy operates an Ownership Tax as a system of road tax or Vehicle Excise Duty. This

charges the car owner based on the kW size of the engine. The charge varies by region.

Electric, LPG and CNG cars are all exempt from the Ownership Tax for the first 5 years.

HGV’s in Italy are subject to an Ownership Tax which varies with the weight of the vehicle

and its payload capacity.

Italy operates a toll system on AutoStrade set at a level of €5.5 per 100kms for cars. HGVs

have a charge levied based on the number of axles.

329

fig (7.95)

fig (7.96)

330

fig (7.97)

fig (7.98)

331

fig (7.99)

fig (7.100)

332

fig (7.101)

fig (7.102)

333

fig (7.103)

fig (7.104)

334

Luxemburg

Luxemburg phased out the use of Leaded Petrol in accordance with EU Directives in 1999.

The rate of VAT on motor fuels in Luxemburg varies, from 6% on LPG to 15% on Unleaded

and Lead Replacement Petrol and for Diesel. Excise Duties on motor fuels in Luxemburg are:


(Euro Cents) 2000

Tax Per Litre/kg

(Euro Cents) 2013

Euro super 95 (Unleaded Petrol) <=10mg/kg 37.209 46.209

Euro super 95 (Unleaded Petrol) >10mg/kg 37.209 46.458


AutoGas Oil (Diesel) <=10mg/kg 25.285 33.500

AutoGas Oil (Diesel) >10mg/kg 25.285 33.83548







Carbon Monoxide emissions in Luxemburg are on a downward path, falling from 93,400

tonnes from all sources in 2000 to 39,000 tonnes in 2010. In 1998 transport accounted for

73.3% of all CO emissions in Luxemburg who no longer report this data to the EU.

Carbon Dioxide emissions in Luxemburg have risen significantly in recent years. In 1990

CO2 emissions were 2,664,330 tonnes. This figure had risen to 6,220,780 tonnes in 2010.

The target set for the reduction in CO2 emissions in Luxemburg by the EU was for a 30%

reduction from the baseline 1990 figure by 2010. In the case of Luxemburg, this target

would appear to have been missed by the proverbial mile. The outturn in 2010 was 234% of

the target, emissions were more than double what they should have been. Transport

accounted for 24.5% of CO2 emissions in the country in 1998, by 2010 Transport’s share was

57.0%.

N2O emissions in Luxemburg have risen in recent years from 90 tonnes in 1990 to 240

Tonnes in 2010. Transport accounted for 48.9% of Luxemburg’s NOx emissions in 1998. As




335

with CO, NOx emissions are no longer reported. Luxemburg emitted 3,500 tonnes of

Sulphurous Oxides in 2000. By 2010 SOx emissions had fallen to 2,200 Tonnes. SO2

emissions are no longer reported.

NMVOC emissions from transport in Luxemburg fell from 11,200 tonnes in 1990 to 8,800

tonnes in 2010. Transport accounted for 56.1% of all NMVOC emissions in the country in

1998. NMVOC emissions are no longer reported.

Registration of a car in Luxemburg costs €50 per vehicle. Vehicle Excise Duty (Road Tax) is

calculated based on CO2 emissions on a pattern from up to 90 grammes per km (min charge)

with a minimum exponential factor of 0.5 increasing at a rate of 0.1 per 10 additional

grammes per kilometre. Older vehicles pay a road tax based on cylinder capacity (cc’s). For

a number of years the Government of Luxemburg ran a scheme encouraging car owners to

switch to less polluting vehicles. This provided an incentive to replace your existing vehicle

with one giving a lower CO2 emissions figure. From 2014 onwards the scheme Prime CAR-e

only relates to electric vehicles and offers a grant of €5,000 on first registration.

Source: http://www.car-e.lu/

HGVs in Luxemburg are taxed on the Maximum Vehicle Weight on a sliding scale from €50

for vehicles weighing up to 600kg up to €530 for a four axle vehicle weighing over 12

tonnes.

Trailers are also taxed at up to €700 for those with the greatest load carrying capacity.

HGV vehicles greater than 12 tonnes are also subject to a Eurovignette road usage charge

based on axles and emissions ranging from $750 to €1,550 per annum.

http://www.car-e.lu/

336

fig (7.105)

fig (7.106)

Energy0.0%

Industry12.8%

Transport73.3%

Waste0.0%

Other13.9%

Source: Adapted from European Env ironment Agency http://warehouse.eea.eu.int/c gi-bin/brok er.exe

LuxembourgCarbon Monoxide Emissions by Sector

1998

337

fig (7.107)

fig (7.108)

338

fig (7.109)

fig (7.110)

Energy0.6%

Industry41.4%

Transport48.9%

Waste1.5%

Other7.6%


LuxembourgNitrogen Oxide Emissions by Sector

1998

339

fig (7.111)

Energy0.9%

Industry49.9%

Transport16.0%

Waste2.1%

Other31.2%


LuxembourgSulphur Dioxide Emissions by Sector

1998

fig (7.112)

340

fig (7.113)

Energy0.4%

Industry5.5%

Transport56.1%

Agriculture1.2%

Waste0.1%

Other36.8%


LuxembourgNMVOC Emissions by Sector

1998

fig (7.114)

342

Netherlands

The Netherlands have eliminated the use of Leaded Petrol in accordance with EU Directives.

They charge VAT on motor fuels at a rate of 21.0%. Excise Duty rates are shown below:


(Euro Cents) 2000

Tax Per Litre/kg

(Euro Cents) 2013



AutoGas Oil (Diesel) <=10mg/kg 35.182 44.028








Carbon Monoxide emissions from transport in Holland have fallen from 713,740 tonnes in

1990 to 319,550 tonnes in 2010. This represents a fall of 55.2% over the period. In 2010,

transport accounted for 56.0% of Dutch CO emissions (1998 – 63.5%).

Carbon Dioxide emissions in Holland continue to increase. In 1990 26,009,020 tonnes were

emitted from transport activities, by 2010, this figure had increased to 34,499,300 tonnes. In

1998, transport accounted for 19.1% of all Dutch CO2 emissions. This figure was 19.0% in

2010.

The Netherlands were set a target reduction of 10% on 1990 baseline figures by 2010 from

the EU. The outturn was 47.38% more than this, CO2 emissions had risen by 32.64%.

Nitrogen Oxide emissions from transport in Holland have fallen from 255,490 tonnes in 1990

to 121,400 tonnes in 2010. In 2010, transport accounted for 46.0% of all Dutch NOx

emissions down from 63.1% in 1998. Sulphur Dioxide emissions in Holland fell from a peak

of 13,370 tonnes in 1990 to 580 tonnes in 2010 a fall of 95.66%. In this latter year, transport

accounted for 2.0% of SO2 emissions down from 19.3% in 1998. NMVOC emissions from

transport fell from 168,270 tonnes in 1990 to 32,150 tonnes in 2010. Transport accounted for




343

22.0% of all NMVOC emissions in Holland in 2010 down from 40.3% in 1998.

The reduced rate of VAT of 6% which applied to public transport has been abolished.

The Dutch system includes a steep charge for vehicle registration which is based on

approximately 1/9th

of the cost of the vehicle and an adjustment for its CO2 emissions in

grammes per kilometre. Diesel vehicles are not encouraged as the system allows a deduction

from the cost calculation of €450 for petrol vehicles and applies a surcharge of €1,900 for

diesel vehicles. All the taxes taken together more than double the cost of the car.

Vehicle Excise Duty (Road Tax) is levied based on the size and weight of the vehicle and

also on the fuel used. Provinces in Holland each set their own charge. Electric cars are

allowed a deduction from the tax to compensate (at least in part) for the battery pack and

electric motor.

Very heavy taxes are also levied for private use of a company car.

344

fig (7.115)

fig (7.116)

345

fig (7.117)

fig (7.118)

346

fig (7.119)

fig (7.120)

347

fig (7.121)

fig (7.122)

348

fig (7.123)

fig (7.124)

349

Portugal

Portugal has eliminated the use of Leaded Petrol in accordance with EU Directives. Portugal

charges VAT on motor fuels at the rate of 23% well up from the 17% it added when we last

looked at the market in 1998. Excise Duty is as shown in the following table:


(Euro Cents) 2000

Tax Per Litre/kg

(Euro Cents) 2013



AutoGas Oil (Diesel) 24.591 36.753







Agricultural gasoil is taxed at the much lower rate of 7.751 €c per litre and has VAT of

13.0%.

Carbon Monoxide emissions from transport in Portugal have been falling from a peak of

527,040 tonnes in 1992 to 126,300 tonnes in 2010. Transport accounted for 27.0% of all CO

emissions in Portugal in 2010, down from 72.4% in 1995.

Carbon Dioxide emissions from transport rose markedly, up from 9,917,070 tonnes

in 1990 to 18,718,090 tonnes in 2010. CO2 emissions from transport in 2010 amounted to

44.0% of total CO2 emissions in Portugal (1998 - 30.0%). The EU allowed Portugal to

increase emissions of Carbon Dioxide above the 1990 baseline figure by 40% by 2010. The

outturn was an increase of 88.75% by 2010. Emissions have fallen over the last four years

due to the crash.

Nitrogen Oxide emissions in Portugal rose from 93,570 tonnes in 1990 to 140,850 tonnes in

2000since when they have declined to 90,940 tonnes in 2010. In 2010 transport accounted for

46.0% of Portugal’s NOx emissions down from 63.8% in 1998.

Sulphur Dioxide emissions from transport have declined significantly in Portugal between




350

1990 and 2010. In 1990 they were 15,920 tonnes and in 2010 they were 3,140 tonnes. In

1995 transport accounted for 5.6% of all SO2 emissions in Portugal. By 2010 this was 5.0%.

NMVOC emissions have fallen from 141,000 tonnes in 1990 to 22,900 tonnes in 2010.

Transport accounted for 12.0% of Portuguese NMVOC emissions in 2010 (1995 - 20.2%).

Cars in Portugal are charged a Registration Tax which is made up of two components:

(1) based on the cylinder capacity (cc’s) of the vehicle and (2) a charge for the vehicle’s

emissions in grammes per kilogram.

Vehicle Excise Duty is levied at the municipal level and at the national level in Portugal.

is made up of the same two components as the Registration Tax:

(1) based on the cylinder capacity (cc’s) of the vehicle and (2) a charge for the vehicle’s

emissions in grammes per kilogram.

HGV’s are also subject to a charge for road use which varies according to weight, number of

axles and year of first registration.

Portugal levies a significant charge for company cars being used for private use.

351

fig (7.125)

fig (7.126)

352

fig (7.127)

fig (7.128)

353

fig (7.129)

fig (7.130)

354

fig (7.131)

fig (7.132)

355

fig (7.133)

fig (7.134)

356

Spain

Spain made use of a derogation from eliminating the use of Leaded Petrol which expired in

2005. VAT on motor fuels in Spain is charged at a rate of 21% well up from 16% in 1998.

Excise Duty is charged at the rates given in the following table:


(Euro Cents) 2000

Tax Per Litre/kg

(Euro Cents) 2013

Euro super <98 (Unleaded Petrol) 37.169 42.469

Euro super >=98 (Unleaded Petrol) 37.169 45.592









Carbon Monoxide emission levels in Spain appear to be falling, down from 2,115,630 tonnes

in 1990 to 282,640 tonnes in 2010. In Spain, transport accounted for 15.0% of CO

emissions in 2010 well down from 57.8% of CO emissions in 1995.

Carbon Dioxide emissions in Spain have been on the increase. In 1990 there were 56,506,280

tonnes of CO2 emissions from transport in Spain. By 2007 this had risen to 108,843,570

tonnes with a decline post recession to 90,421,900 by 2010. The target set for Spain by the

EU was to keep the increase in CO2 emissions from the baseline 1990 figure to 17% in the

period to 2010.

The outturn was an increase of 60.02%. Transport accounted for 35.0%of CO2 emissions in

Spain in 2010, well up from 28.7% of CO2 emissions in 1998.

Nitrogen Oxide emissions from transport in Spain appear to have peaked in 1992 at 737,220

tonnes. By 2010 emissions had fallen to 468,210 tonnes. In 2010 transport accounted for

47.0% of Spanish NOx emissions well down from 59.6% of Spanish NOx emissions in 1995.

Sulphur Dioxide emissions in Spain give the appearance of a wavy line, rising, then falling,




357

then rising again from 92,890 tonnes in 1990 to 111,600 in 1994, to 51,380 in 1998 to 75,170

tonnes in 2010. In 1995 transport accounted for 6.6% of SO2 emissions. By 2010 this had

risen to 15.0%NMVOC emissions from transport in Spain peaked in 1992 at 410,070 tonnes.

By 2010 emissions had fallen to 51,320 tonnes. Transport accounted for 41.6% of NMVOC

emissions in Spain in 1995. This had fallen to 7.0% by 2010

Spain imposes a vehicle registration duty when cars are first registered. The tax is levied as

an ad valorem tax at rates which vary dependent on CO2 emissions in grammes per km.

Authority to vary the rates has been passed to regional governments. Various incentives are

being offered in different regions to encourage the use of electric and hybrid vehicles.

Vehicle Excise Duty in Spain is set in a variety of ways for different vehicle types. For cars it

is based on the power of the vehicle in horsepower (hp). This varies from a minimum charge

for vehicles up to 8hp of €12.62 per annum to a maximum of €112 per annum for cars over

20hp.

Buses pay road tax based on the number of seats in the vehicle ranging from €83.3 for

vehicles up to 20 seats to €148.3 for buses & coaches with more than 50 seats.

Spain levies tolls on the use of motorways. Details of these can be found courtesy of the AA

at:

http://www.theaa.com/allaboutcars/overseas/european_tolls_select.jsp

Spain is to introduce a charge for lorries using motorways to be implemented from 2016

Source: http://www.transportenvironment.org/news/spain-accepts-lorry-charging

http://www.theaa.com/allaboutcars/overseas/european_tolls_select.jsp

http://www.transportenvironment.org/news/spain-accepts-lorry-charging

358

fig (7.135)

fig (7.136)

359

fig (7.137)

fig (7.138)

360

fig (7.139)

fig (7.140)

361

fig (7.141)

fig (7.142)

362

fig (7.143)

fig (7.144)

363

Sweden

Sweden has ended the use of Leaded Petrol in accordance with EU Directives. The rate of

VAT on fuel in Sweden is, along with Denmark and Croatia, the highest in Europe at 25%.

Excise duty on motor fuel in Sweden is charged at the rates shown in the table below:


(Euro Cents) 2000

Tax Per Litre/kg

(Euro Cents) 2013

Euro super (Unleaded Petrol) - Class 1a 52.924 46.028

Euro super (Unleaded Petrol) - Class 1b 52.924 66.446

Euro super (Unleaded Petrol) – Class 2 52.924 66.800

Lead Substitute Petrol (LRP) 75.651

AutoGas Oil (Diesel) – Class 1 34.596 57.299









Gasoil used as road fuel in the agriculture industry carries a rate of 37.235€c per litre. For

fishery use and for forestry the rate is further reduced to 13.844€c per litre. The lowest

possible rate of zero is applied for use on the railway network.

Carbon Monoxide emissions from transport in Sweden fell from 683,880 tonnes in 1990 to

257,600 tonnes in 2010. 40.0% of CO emissions in Sweden in 2010 came from transport


Carbon Dioxide emissions from transport in Sweden are on an upward trend from 18,777,750

tonnes in 1990 to 20,521,650 tonnes in 2010. Sweden was set a target of keeping to a 5%

increase in CO2 emissions from the 1990 baseline figure by 2010. The outturn for Sweden

was a 9.29% increase by 2010. In 2010, transport accounted for 36.0% of Swedish CO2

emissions slightly down from 37.1% in 1998.

Nitrogen Oxide emissions from transport in Sweden in 2010 were 83,250 tonnes, down from




364

188,180 tonnes in 1990. In 2010, 51.0% of Swedish NOx emissions came from transport,


There were 4,100 tonnes of Sulphur Dioxide emissions from transport in Sweden in 2010,

down from 11,200 in 1990. Only 2.8% of Swedish SO2 emissions in 1997came from

transport. By 2010 that figure had risen to 12.0%.

NMVOC emissions from transport in Sweden were 166,670 tonnes in 1990. By 2010 this had

fallen to 43,770 tonnes. Transport accounted for 22.0% of NMVOC emissions in Sweden in

2010, well down from 36.7% in 1997.

Excise Duty in Sweden sees different rates of duty levied on different grades of fuel,

resulting in fuels with the lowest sulphur content capturing market share at the expense of

higher taxed and therefore higher priced dirtier fuels. Sweden operates an incentive scheme to

encourage the purchase of greener vehicles. This has changed over time and presently stands

at a SEK 40,000 grant for purchase of a vehicle with emissions of up to 50g of CO2 per km.

In common with other European countries, Vehicle Excise Duty (Road Tax) varies according

to vehicle type, weight, number of axles, fuel type and vehicle age. A petrol engined vehicle

weighing 1,650 kgs would pay SEK 2,306, heavier vehicles pay more. Diesel engined

vehicles pay a higher charge to compensate for the lower rate of excise duty charged on

diesel.

A vignette system is in place as a road toll charged to trucks exceeding 12 tonnes in weight.

A congestion charge is in place for Swedish vehicles in both Stockholm and Gothenburg

aimed at improving traffic flow during business and commuting hours from 06:00 to 18:30.

http://www.skatteverket.se/privat/sjalvservice/blanketterbroschyrer/broschyrer/info/104.4.39f

16f103821c58f680007193.html

http://www.skatteverket.se/privat/sjalvservice/blanketterbroschyrer/broschyrer/info/104.4.39f16f103821c58f680007193.html

http://www.skatteverket.se/privat/sjalvservice/blanketterbroschyrer/broschyrer/info/104.4.39f16f103821c58f680007193.html

365

fig (7.145)

fig (7.146)

366

fig (7.147)

fig (7.148)

367

fig (7.149)

fig (7.150)

368

fig (7.151)

fig (7.152)

369

fig (7.153)

fig (7.154)

370

Conclusions

This Chapter considered a wealth of evidence on the European motor fuel market. We found

that:

Prices of Unleaded Petrol varied widely (net of duty & taxes) and were 18.45% higher in

Malta (most expensive) than in Austria (least expensive).

Austria also had the cheapest Diesel net of duty and taxes. Finland was found to be most

expensive in this category, approximately 16.54% higher than Austria.

Taxation was found to add to the anomalies. Unleaded Petrol in Italy (most expensive)

sells for 33.85% more than in Bulgaria (least expensive).

Sweden’s diesel (most expensive) retails for 28.5% more than in Lithuania (least

expensive).

Duty & Taxes on Unleaded Petrol in the NL are 80% higher than in Bulgaria (lowest).

Duty & Taxes on Diesel in the UK are 71% higher than those in Bulgaria (lowest).

Price caps protect rural motorists in places such as Sweden.

Freeing up markets (e.g. as has happened in Spain) leads to higher prices in rural areas.

In France, a fund previously established to keep rural filling stations open appeared to

have been abandoned by 2013.

Article 9 of Council Directive 92/82/EEC and Article 8 of Council Directive 92/81/EEC

allow Portugal to reduce fuel taxes in outlying island areas.

Greek Islands also enjoy lower Excise Duty in island areas under Council Directive

92/82/EEC. Greece operates a system of price ceilings on motor fuels.

An attempt by the Dutch to lower fuel duty at sites bordering Germany was held by the

Commission to constitute an illegal subsidy.

Italy free petrol offer to tourists who stayed in Italy for a set period was commented on.

Air Quality improvements appear to stem from EU rather than National Government

efforts.

In most European countries Carbon Dioxide emissions from transport have been falling

post recession.

In most European Union countries levels of other pollutants were falling due to fuel

quality Directives from the EU.

371

Some EU Member States operated schemes to scrap older cars.

Road Tax in EU Member States usually reflected a combination of engine size, vehicle

age and emission levels.

Many Member States operated road charging or tolling schemes.

Concessions are often given to public transport providers from excise duties.

LPG in Finland is exempt from Excise Duty.

Sales Tax on new cars has slowed vehicle registrations in some EU States, most

noticeably in Denmark.

Italy intends to use part of the increase in Excise Duties for Regional Selective

Assistance.

The Government should be congratulated for applying to the European Council for

permission to reduce excise duty

In island areas (Western & Northern Isles)

In rural areas (North West Highlands)

We should conclude this Chapter by making recommendations for developing national

government policy.

372

Recommendations

The Fuel Duty Escalator must be abandoned permanently.

Annual increases in Fuel Duty to take account of inflation must be abandoned.

Price Caps should be introduced on the wholesale supply of motor fuel in rural areas

to counteract regional monopolies.

An industry levy on the French model should be established at 1p per 100 litres at

the wholesale level to provide a fund for maintaining and upgrading rural filling

stations. This should be collected nationally and disbursed by local councils in rural

areas.

Congestion and pollution in urban areas should be tackled by road tolls and parking

charges in urban areas with funds raised used to reduce public transport fares and

increase frequency and/or coverage of bus, train, tram and underground services.

Surplus funds raised should be used to create pollution “sinks” through tree

planting in both urban and rural areas to absorb carbon emissions.

Consideration should be given to schemes for scrapping older, more polluting

vehicles.

Vehicle Excise Duty should be gradated to more accurately reflect the pollution

caused by vehicles.

Sales Tax on new cars should more closely reflect the environmental characteristics

of the vehicle.

The European Auto-Oil Programme should continue to be fully supported by the

Government, with incentives (lower Excise Duty on the fuels, accelerated Capital

Allowances for the refiners) being offered for fuels which meet the requirements of

Stages V and VI as early as possible.

373

8) Squaring the Circle - Conclusions & Recommendations

After having looked at the UK motor fuel market, both urban and rural and after considering

the problems of pollution at both a national and international level and the social policy and

regional policy imperatives facing governments at home and in Europe, what conclusions can

we draw?

In Chapter Two we learned that:

Vehicle ownership figures both at home and abroad continue to increase as a

consequence of increasing affluence.

Retail fuel sales in the UK have peaked and are now on a downward trend.

Spare refining capacity existed both in the UK and in Europe leading to closures.

Wholesaling in the UK has become increasingly concentrated in fewer hands in

recent years. The role of Irish firm GB Oils continues to grow in importance.

Supermarket share of motor fuel markets has grown to 45% in recent years.

The number of retail sites has fallen rapidly in recent years.

The five largest wholesalers supply over half the sites in the UK.

Unleaded Petrol has replaced Leaded Petrol in the UK.

Ultra Low Sulphur Diesel has replaced “dirty” diesel over the last few years.

Independently owned sites have been systematically squeezed out of the UK motor

fuel market.

Solus Ties were suicide notes in recent market conditions.

Selective Price Support (SPS) became unavailable in rural areas and was often

withdrawn at the whim of the Oil Company supplying a site, thus ensuring its

closure.

The OFT’s acceptance without question of all industry supplied information meant

the market could be manipulated without interruption by the big players.

In Chapter 3 we looked at the particular problems faced in rural areas, concentrating on the

motor fuel market in the Highlands & Islands of Scotland and found the following:

374

Population density was amongst the lowest in Europe, public transport links were

poor and often non-existent, car dependency was high, and will remain so and is

reflected in a high per capita vehicle ownership pattern.

Supply to retail sites was concentrated in the hands of three companies.

The number of outlets had collapsed in recent years.

In recent years the supply chain (refiner, wholesaler, retailer) had earned up to 91%

more from the sale of a litre of motor fuel in the Highlands & Islands than in the rest

of the UK. This difference will now fall slightly due to Westminster’s EU duty

derogation.

Wholesaler & Retailer margins had been nearly two and a half times higher in the

same period.

Scottish Government assistance for fuel tank replacement has been withdrawn.

The excess earned by the supply chain in the last 10 years was approx £350m

pounds.

In 2011 the supply chain earned an extra £35 million gross.

The OFT conclusion that consumers were “not paying over the odds” was deeply

flawed.

In Chapter 4 explaining the urban / rural price dichotomy we found that:

The urban market in the UK operates in a competitive manner.

The rural market in the UK appears to earn abnormal profits, mainly through price

discrimination by wholesalers.

Higher wholesale prices bear no relation to delivery costs.

Higher retail prices charged in rural areas are due mainly to higher wholesale prices

and wholesale profits.

Wholesalers are applying dissimilar conditions (prices) to similar transactions.

The price of fuel in rural areas is indicative of collusion amongst and not

competition between wholesalers. When Highland Fuels was able to enter the

Western Isles market and challenge the GB Oils monopoly there was a huge drop in

retail prices.

Wholesalers have not refused to supply rural retailers, but they have refused to

supply at a realistic price. This might appear to constitute an abuse of a dominant

position.

375

Filling station owners in rural areas are not, in general, profiteering.

The following Chapter, Chapter 5 looked at Laissez-faire and the motor fuel market and

concluded that:

Regulation by the OFT and MMC/Competition Commission (soon to be renamed

Competition & Markets Authority) was inadequate and characterised by inaction.

Social policy was outwith the terms of reference of the regulators.

Highland Council acted to reduce price disparities for Marine Gasoil but did

nothing on Motor Fuels or on Home Heating Oil.

Government blame the Oil Companies and/or Retailers.

Oil Companies blame the Government and/or Retailers.

The Fuel Duty Escalator made matters worse.

The public blame the lot of them.

Various possible solutions were identified:

Continual monitoring of regional and national prices and market shares.

Arbitration for disputes between wholesalers and retailers.

Lowering Excise Duty in rural areas has recently been started by the UK

Government.

Subsidies for Filling Stations in rural areas.

Increased public transport spending in rural areas.

Wholesale price capping in rural areas.

National Levy on (high volume?) retail sites to support the rural retail network.

Derogation from Stage II of the Vapour Recovery Directive for rural areas or

support for equipment installation.

Grants for LPG tank installation in rural areas.

Chapter 6 looked at Environmental Policy and the Fuel Duty Escalator. It concluded as

follows:

376

The Fuel Duty Escalator has eventually reduced the demand for motor fuels.

The Fuel Duty Escalator has not reduced pollution or congestion in urban areas.

The fuel duty escalator results in motor fuel prices which are too low in urban areas

and too high in rural areas to reflect the damage caused by motoring.

Levels of pollution are falling as a result of European Directives on motor fuels, the

agreements with car manufacturers to reduce emissions from engines, and the fitting

of catalytic converters.

The following recommendations were proposed:

The Fuel Duty Escalator be abandoned permanently

The European Commission should continue the task of reducing emission levels

through further Directives on motor fuel standards and through agreements with

vehicle manufacturers.

Congestion Charges should be imposed in urban areas through

Workplace parking charges and/or

Electronic tagging for road use charging

An element of the charges in urban areas should be used to reduce fuel prices in

rural areas by:

Using some of the HMRC collected fuel duty receipts and/or

Using parking charge receipts and/or

Using receipts from electronic tagging

Public Transport in urban areas should have its fares subsidised and its network

expanded and its timetable improved.

The final Chapter of detailed work looked at prices and markets in the EU and concluded:

Sweden’s diesel (highest) retails for 28.5% more than in Lithuania (least expensive).

Duty & Taxes on Unleaded Petrol in the NL are 80% higher than in Bulgaria

(lowest).

Duty & Taxes on Diesel in the UK are 71% higher than those in Bulgaria (lowest).

Price Caps protect rural motorists.

France’s 1000 Village Fund should be considered here to protect rural supply

networks.

Highlands & Island areas and rural areas elsewhere should have Fuel Duty reduced

by agreement with Brussels.

377

Schemes to scrap older cars worked and should be supported permanently.

The following Recommendations were suggested:

Abandon the Fuel Duty Escalator.

Abandon inflation adjustments to fuel duty in the budget.

The Government should be commended for applying to the European Council for

permission to reduce excise duty in the Highlands & Islands of Scotland.

In island areas (Western and Northern Isles)

In rural areas (North West Highlands)

In rural areas elsewhere in the UK where supply is under threat & prices

high

Price Caps should be introduced on the wholesale supply of motor fuel in rural areas

to prevent regional anomalies.

A French style levy should be established to protect rural fuel supplies.

Congestion & pollution in urban areas should be tackled by road tolls and parking

charges.

Pollution “sinks” – planting trees - should also be considered as well as tackling

sources.

Older vehicles should be scrapped.

Sales Tax on new vehicles and Road Tax should reflect the pollution caused by the

vehicle.

The early implementation of future stages of the European Auto-oil Programme

should be encouraged.

We should now group all of these findings into a checklist format by policy area for ease of

use by politicians tackling these issues.

378

Policy Area Yes/No

Or Explanation

1) Fuel Taxation

Would you abandon the Fuel Duty Escalator’s

automatic increases in fuel duty above the rate

of inflation?

Would you abandon annual Budget increases

in Fuel Duty in line with inflation?

Will you keep/expand the European Council

of Ministers reduction in fuel duty:

i) in Island areas?

ii) in Highland areas?

iii) in rural areas elsewhere in the UK?

2) Competition Policy

Will you appoint a Regulator for the fuel

supply industry?

Will you ensure continual monitoring of

prices and markets?

Will you implement Price Caps in rural areas?

Will you end price discrimination against

rural motorists?

Will you end the application of dissimilar

conditions (prices) for filling stations

purchasing petrol?

Will you establish a Council run purchasing

co-operative for effective competition in

wholesale supply?

3) Transport Policy

Will you support parking charges in urban

areas?

Will you introduce road tolls in city centres?

Will you increase the coverage and

availability of public transport in urban and

rural areas?

Will you increase the frequency of public

transport services?

By how much will you increase funding to

local authorities for resurfacing non-trunk

roads?

4) Social Policy

Will you provide funds to scrap older

vehicles?

Will you widen access to LPG conversion

grants and Hydrogen once available?

379

Policy Area Yes/No

or Explanation

5) Environmental Policy

Will you accept the Fuel Duty Escalator is a cash

cow for government?

Will you accept the Fuel Duty Escalator cannot

cut congestion?

Will you abandon the Fuel Duty Escalator

Permanently?

Will you tackle congestion in cities through

parking charges?

Will you tackle congestion in cities through

tolls?

Will you increase subsidies for buses?

Will you increase subsidies for other public

transport?

Will you accelerate the introduction of cleaner

fuels?

Will you freeze taxes on all motor fuels

including LPG?

How will you reduce CO2 emissions?

6) Regional Policy

Will you guarantee no further filling station

closures in remote rural and island areas?

Will you fund tank replacement for all remaining

rural sites?

Will you fund installation of LPG tanks in all

rural areas or Hydrogen once available?

Will you accept that taxis in rural areas are

“essential users” of motor fuels?

Will you accept that hauliers in rural areas are

“essential users” of motor fuels?

Will you establish a Council run purchasing co-

operative for effective competition in wholesale

supply?

Will you use fuel duty receipts to cut prices in

rural areas?

Will you levy high volume retail sites to support

low volume ones?

Will you cap fuel prices in rural areas?

Will you subsidise filling stations in rural areas?

Last Word

UK Politicians from all the major parties whilst in opposition are always in favour of slowing

duty rises on motor fuels. Whilst in office they have ignored the public over the issue of

380

motor fuel prices. Government can step in using the buffer of higher taxation receipts from

North Sea Oil, higher duty on motor fuels and higher VAT receipts to reduce the cost and

increase the availability of public transport. Concessional rates of duty for zero emission fuels

such as hydrogen would also make sense. These are the only ways in which climate change

could and should be tackled. Cars will only be left at home if the alternative is sufficiently

attractive and sufficiently cheap. At present it is neither.

381

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Standard & Poor’s DRI - KULeuven (1999) Auto Oil II Cost Effectiveness Study, Part III: The Transport Base

Case, Annex B.4: Greece

http://warehouse.eea.eu.int/cgi-bin/broker.exe

http://europa.eu.int/comm/environment/enveco/env_database/austria2000.pdf

http://europa.eu.int/comm/environment/enveco/env_database/belgium2000.pdf

http://europa.eu.int/comm/environment/enveco/env_database/denmark2000.pdf


Case, Annex B.1: Finland

http://europa.eu.int/comm/environment/enveco/env_database/france2000.pdf


Case, Annex B.2: France

http://europa.eu.int/comm/environment/enveco/env_database/germany2000.pdf

http://europa.eu.int/comm/environment/enveco/env_database/ireland2000.pdf

http://europa.eu.int/comm/environment/enveco/env_database/italy2000.pdf

http://europa.eu.int/comm/environment/enveco/env_database/luxembourg2000.pdf

http://europa.eu.int/comm/environment/enveco/env_database/netherlands2000.pdf


http://europa.eu.int/comm/environment/enveco/env_database/portugal2000.pdf

http://europa.eu.int/comm/environment/enveco/env_database/spain2000.pdf

http://europa.eu.int/comm/environment/enveco/env_database/sweden2000.pdf



http://poigps-data-team.com/netherlands/petrol/

http://www.bovagrai.info/auto/2012/index.html

http://www.bovag-cijfers.nl/archive/bovag/2005/nl/auto

http://www.hbd.nl/pages/4026/Branches/Pompshops.Tankstations-in-cijfers.html




http://poigps-data-team.com/netherlands/petrol/

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http://www.bovag-cijfers.nl/archive/bovag/2005/nl/auto

http://www.hbd.nl/pages/4026/Branches/Pompshops.Tankstations-in-cijfers.html

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http://geoportal.mityc.es/hidrocarburos/

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Open Market Pricing,” Energy Journal, Vol 20, No 4, Cleveland, International Association for Energy

Economics

Ignacio Contin-Pilart, Aad F. Correlje and M Blanca Palacio (2006) Competition, regulation, and pricing

behaviour in the Spanish retail Gasoline Market Departamento de Economıa Aplicada III (Econometrıa y

Estadıstica) de la Universidad del Paıs Vasco







http://geoportal.mityc.es/hidrocarburos/






393

INDEX

1-2-3 241

4-star 135, 178-9

A

AA 45, 357

abandonment 266

ABC Chain 242

Aberarder 108

abnormal profits 149, 152-4, 156, 374

Absolute Cost Advantages 129-30

abuse 48, 134, 138, 153, 156, 170, 374

accuracy 300

ACEA Tax Guide 271, 278-9, 285-6, 292, 294, 299, 306, 313, 320, 327, 334, 342, 349, 356, 363

Acharacle 112, 117

Achnasheen 111, 113-14, 118

Achness Hotel 113

act 45, 134, 137, 166, 169-70

Adam Smith Institute 213-14, 387

Address 111, 116

AEA (Atomic Energy Authority) 198

Aegean 250

Ag 232-3

Agency 337, 339-41

agent 44

Agip 254-5

agreements 3, 45-6, 48, 64, 100, 169-72, 217, 221, 225, 376

marketing 11

solus 50, 122, 140-1

vertical 48

Agric 194

Agricultural sources 266

air quality 203, 215, 264-5, 269

air quality management 219

All-star Price Survey 69, 71, 73-85, 94, 96-8, 383

Alness 110

Amber 251

Amending Council Directive 1999/32/EC 203, 387

ammonia 266, 268

Amoco 15, 18, 22

Analysis & Coal 87, 92, 96

Anderton, Alain 129, 384

Annex 271, 300, 307, 390-1

Annual Report 389

annum 5, 54, 156, 168, 202, 216, 286, 293, 300, 321, 335, 357

Antunano, Aitor Ciarreta 262

Api 254-5

Apparu, Benoist 244

Appendix 58, 63, 70-82, 88, 93-4

Applecross 109

Applegreen 251

application 172, 245, 378

approx 293, 374

AQPI 187-9, 386

AR (Average Revenue) 150

Aral 248, 255

Ardersier 109

394

Ardgay 110, 113-14

Ardgay Services 113-14

areas, remoter 180-1

Argos 240

Argyll 52, 112, 117

Argyll & Bute 53-4, 179

Arval/PHH 149

Arisaig 108-109

arrival 22, 26, 45, 149

AS 24 Fuel 243

Asda Petrol Station 21, 118

Aultnamain 110

Austria 232-9, 277-9, 370

Austrian Petrol Market 237-8

Austrian petrol station network 238

authorities, regional transport 219

Auto Oil II Cost Effectiveness Study 271, 390-1

AutoGas Oil 334, 342, 349, 356, 363

Automotive Gas Oil 271, 278, 285, 292, 299, 306, 320, 327

Avanti 238

average ppl 68, 70, 72

average prices 66, 260-1

weighted 228

Average Revenue (AR) 150

Avia 238-40, 243, 248, 257

Aviemore 107

Avin 250

Avoch 111

axles 286, 294, 314, 328, 335, 350, 364

Aznar, José María 260

B

Bain, Joseph S. 384

Balintore 110

Ballachulish 108

Balmacara 113

Balmacara Filling Station 113

Bannerman Company Ltd 118-19

Barbaraville 110

Barriers to Entry 120, 128-9, 384

Bartlett 112

baseline 271, 285, 320, 327, 334, 356

baseline figure 278, 292, 300, 342, 349, 363

battle, hypermarket outlets 137

Bayliss, David 221, 388

BBC (British Broadcasting Corporation) 214-5

Beauly 108

Belgian Petrol Market 239-40

Belgium 232-6, 239-40, 261, 284-5

benefit 46, 48, 214, 220, 245, 268

Benze, Konrad 262

Berlin 128, 384

Best Practicable Environmental Option (BPEO) 205

Bettyhill 107

Bft 248

Bilia 263

Bilisten 263

biofuel content 238

395

Blackwell/IEA 388

Blair, Tony 228

Blanket fuel duty 176

Blow, Laura 212-13, 219, 387

Blueprint 141, 210-11, 218, 384, 387

Bn kms 5

Boat of Garten 107

Bonar Bridge 110

Borrie, Gordon 169

Bower 107

BP 11-12, 15, 18-20, 55-7, 100, 121, 141, 154-5, 238, 243, 255, 257-8, 260, 381, 388

BP Statistical Review of World Energy 231-2, 388

BPEO (Best Practicable Environmental Option) 205

breakdown 32, 45, 123, 251, 262

Bridgend Filling Station 116-17

Broadford 109

Brora 110, 118

Brussels 166, 271, 278, 285, 292, 299, 306, 313, 320, 327, 334, 342, 349, 356, 384-91

Bulgaria 228, 234, 370, 376

Bulletin Petrolier 227, 229-30, 271, 278, 285-6, 292, 299, 306, 313, 320, 327, 334, 342, 349, 356, 363, 388

Burmah 15, 18, 22

burning oil 245

Burnside Garage 111

buses 135-6, 138, 203, 286, 357, 379, 386

business 47, 55-6, 64, 66, 137, 139, 151, 153-4, 165, 172, 246, 263, 269, 364

motor fuel retailing 151

Byrne, Ian 239

C

Caberfeidh Guest House 112

Caffarra, C. 44, 381

Caithness 111-14, 116, 384

calculations 55, 100

calite-des-produits 248, 389-90

Calthrop, E. 141, 211-12, 218, 384, 387

Cameron, Philip 112

Campaign for Fair Fuel Prices 148, 384

Campbell, Jonathan 384-5

CAMPSA 260

Campus 251

Cannich 108

capacity 11, 328, 335

cylinder 286, 335, 350

capital resources 122

Capital Spending 121-2

captive 133-4

captive customers 133

Car Dependence in Rural Scotland 53, 173, 176, 382, 385

Carbon Dioxide 185, 218, 266, 270, 278, 285, 299, 306, 313, 320, 327, 334, 342, 349, 356

carbon dioxide emissions 217-18, 270, 349

Carbon Monoxide 185, 192, 265, 267, 270, 285, 292, 299, 306, 313, 320, 327, 334, 337, 342, 349, 356, 363

carbon tax 217-18, 300

Carrbridge 107

Carrefour 243

cars 5, 135, 142, 177, 181, 203, 206, 219-20, 232-4, 268, 286, 321, 328, 357, 386-8

new 217, 268, 272, 293, 300, 307, 371-2

Carsberg, Bryan 166, 169, 384

396

cartels 67, 86, 178-9, 184

Castletown 107

Catalist 149

cc 271-2, 286, 314, 335, 350

Ceiling Regulation to Open Market Pricing 261, 389, 391

Central Research Unit 173, 201

Central Statistical Office (CSO) 380

centre, urban 219-20, 224

CEPSA (Total) 258, 260

change 22, 25-6, 63, 149, 213, 232, 241, 252, 264

Changing Climate 216-17, 388

characterise 132

charge 64, 136, 151, 153, 165, 169, 207, 220, 225, 279, 286, 293-4, 321, 328, 350

chart 17, 26, 32, 58-9, 67, 232-3, 235-6, 241, 266

cities 4, 51, 66, 135-6, 138-40, 142, 149, 214-15, 378-9

Class 363

cleaner fuels 2, 4, 379

Cleveland 389, 391

closures 11, 58, 64, 66, 143, 222, 238, 243, 253, 373

Cluanie Inn 117

CNE (Comisión Nacional de la Energía) 261

CO emissions 204, 278, 285, 292, 306, 313, 335, 356

Co-operative Group Ltd Petrol Station 116-17

CO2 219, 271-2, 306, 320, 364

CO2 emissions 271, 278, 285, 292, 306, 313, 320, 327, 334-5, 342-3, 349, 356-7, 363, 379

Cole, John 169

Cole-Hamilton, Simon 152, 155, 384

Coll 86

Collins, B. 53, 173, 176, 183, 213, 219, 382, 385, 387-8

Comhairle Nan Eilean Siar 200

Comisión Nacional de la Energía (CNE) 261

Comité Professionnel de la Distribution de Carburants 243

Commission 44, 46, 153, 165-7, 172, 184, 200, 205, 215, 256, 370, 384

Commissioner Mario Monti 172

Committee 121, 164-5, 175, 180-2, 206, 244

Commons Trade & Industry Committee 173, 382, 385, 387

companies 11, 17, 26, 45-7, 172, 174, 177, 243, 250, 343, 373

supermarket 129

Companies House Annual Accounts 157-9

Company Independent 40-2

Company Websites 241-2, 255

competition 46-9, 55, 57, 64, 86, 128, 130, 132, 136-7, 151, 156, 165, 177-8, 260-1, 382-3

distorting 169

distortion of 170-1

effective 144, 378-9

lower priced German 256

supermarket 45, 131

Competition & Markets Authority 375

Competition Act 48, 134, 167-9, 171, 382, 384-5

Competition Commission 165-7

competition policy 3, 164-6, 172, 256, 378

competition price differentials 100

competitive disadvantage 3, 170-1

complex monopoly market 143, 145

components 32, 121, 350

concentration 57, 174, 177, 208, 212, 219

Concessional rates of duty 379

concessions 245-6, 371

conditions, trading 170-1

397

congestion 3-4, 135, 207-8, 211-14, 216, 218-22, 224-6, 256, 264, 266, 372, 375, 377-9, 388

tackling 220-1

Congestion Charges 214-15, 225, 364, 376

Congestion Charging in London 214

congestion levels 208, 266

connection 167-8, 170-1

Conoco 248

Conon Bridge 109

Consommation 247

Consorzio Grandi Reti 253

consumers 86, 104, 129, 131, 142, 168, 170, 175, 184, 223, 228, 231, 250, 253, 260-2

Contin-Pilart, Ignacio 261

continual monitoring of prices and markets 3, 378

contracts 45, 56, 64, 170-2

contracts subject 170-1

control pollution 226, 264

control production 170-1

conurbations 268-9

conviction 168

Cool, Thomas 256, 389

Coole N., 53, 173, 176, 183, 213, 219, 382, 385, 387-8

Correlje Aad F. 261, 389, 391

COST of HIGHER PETROL PRICES 101

Cost Structure 123-4

costs 51, 59, 100, 120-2, 125-6, 130-1, 133-4, 145-6, 155, 180, 204, 213-14, 220, 222-3, 343

extra 86, 123-4, 155, 259-60

higher 2, 121-2, 139

total 207, 210

transportation 181, 263

council 164, 247, 251, 378-9

Council Directive 92/81/EC 389, 391

Council Directive 92/82/EC 389, 391

Council Directive 2003/96/EC 247, 250, 300

country 47, 54, 206, 233, 334-5

Coylumbridge 107

cranes 245-6

Crawford, Ian 212-13, 219, 387

creditsafeuk.com/ 160-2

Cromdale 107

Crossal 109

Cross Elasticity of Demand 135

Croy 109

crude prices, higher 32

CSERGE 210-11, 218

CSO (Central Statistical Office) 380

D

Dalvik Oil 263

Dalwhinnie 107

damage 200, 211, 220, 222, 225, 307, 376

Danish Petrol Market 241

Dats-24 240

Day, Alan 221, 388

DBERR 165

DECC (Department of Energy and Climate Change) 381, 383

deduction 343

DEFRA 187-9, 192-6, 267, 388

degree 133, 144, 382

398

Delek 240, 255, 257

delivery 120-1, 123, 152, 155-6, 178, 201, 263

Delivery Cost 123, 152, 155, 374

Deloitte 222, 388

demand 7, 11, 26, 53, 134-6, 138-42, 145-7, 206, 223, 225, 231, 234, 375

level of 65, 135

pattern of 231

price elasticity of 65, 138

total 134, 138, 142

Demand for Motor Fuels 5, 51

Denmark 232-4, 236, 240-1, 291-3, 363, 371

Denmark charges VAT on Motor Fuels 291

density 51, 206, 235

Department 250, 307, 390

Department of Business 165

Department of Energy and Climate Change (DECC) 381, 383

Department of Trade & Industry (DTI) 32, 46, 68, 70, 72, 89, 98, 144, 166, 168-9, 381, 385

Department for Transport 383

Department of Transport 5, 380-1

Department of Transport Traffic 54

Derogation of Vehicle Excise Duty for HGVs 181

derogations 58, 122, 176, 183, 201-2, 228, 247, 253, 258, 355, 375

Derv Prices 381

DETR (Department for Environment, Transport and the Regions) 265-6, 269, 380, 390

development 63, 131, 164, 166, 206, 233, 238, 240, 242, 249, 255, 271, 388

technical 170-1

DG Energy & Transport 271, 278, 285, 292, 299, 306, 313, 320, 327, 334, 342, 349, 356, 363, 390

DGFT (Director General of Fair Trading) 165, 168-9, 173-4, 177, 384

diagrams 32, 132, 138, 142, 144-7, 149-51, 208, 210, 222-3, 226, 237-43, 248-9, 251-2, 254-5, 257-9

dichotomy 100, 120, 237

diesel 26, 86, 96-7, 125-6, 135-6, 203-4, 226, 228, 231, 247, 292-3, 313-14, 334, 342-3, 363-4

diesel cars 314

diesel diagrams 32

diesel lorries 203, 386

diesel market 177

Diesel Price 67, 72, 103, 136, 225, 228

Diesel Pricing 49, 126, 180, 383

diesel vehicles 279, 343

differences 68, 70, 72, 86, 133, 149, 152, 175, 178, 181, 261, 374

Dingwall 109, 111-13, 118

Din-X 263

Direcao-Geral das Alfandegas e Impostos Especiais 259

Direcao-Geral de Hidraulica, Engenharia, Rural e Ambiente 259

Directive 3, 201-3, 215, 225, 247, 250, 270, 376

Directive 2009/126/EC 202-3

Directive 2009/126/EC Directive on Stage II petrol vapour recovery 387

Directive on Stage II petrol vapour recovery 203

Director General of Fair Trading see DGFT

dirtier fuels, higher priced 364

dissimilar conditions 2, 170-1, 378

applying 134, 156, 170, 374

distribution 11, 63, 173, 175, 201, 243, 246, 383, 385, 387

Distributional Effects of Taxes on Private Motoring 212, 218, 387

diversity 137

Dochgarroch 108

dominant position 134, 153, 170, 374

Dores 108

Dornoch 110, 112, 118, 148, 152

Dounreay 107

399

Driffield, Nigel 384

drivers 135, 137, 141, 211

Drumnadrochit 108, 117

DTI (Department of Trade & Industry) 32, 46, 68, 70, 72, 89, 98, 144, 166, 168-9, 381, 385

DTI Energy Policy 87, 92, 96

DTI Energy Policy & Analysis Unit 68, 70, 72

Dulnain Bridge 107

Dun-Alscaig Est.Management Ltd 113-14

Dunbeath 108

Dunnet 107

Dunnet, William 116

Duntulm 109

Durness 112, 116

Duror 109

Dutch Petrol Market 257

Duties & Taxes 271, 278, 285, 292, 299, 306, 313, 320, 327, 334, 342, 349, 356, 363, 390

duty 49, 86-8, 92-3, 96-7, 123-6, 226, 228, 238, 243-4, 251-2, 257-9, 263, 285, 292, 379

Duty & Taxes 370, 376

Duty & VAT 89, 94, 98, 125-6

Duty and VAT rates 237

E

earning 65, 153-4

EC DG Taxation 271, 278, 285, 292, 299, 306, 313, 320, 327, 334, 342, 349, 356, 363

EC Directives on Motor vehicle Emissions 203

ec.europa.eu/taxation 237-8, 247, 249, 251-2, 257, 259, 263, 271, 278, 285, 292, 299, 306, 313, 389-90

Economic Affairs 220-1, 388

Economic and Social Impact Assessment 63, 173, 383, 385, 387

Economic Impacts of Road Fuel Prices 7, 179, 381-2, 384

Economics 129, 384

economies 22, 129, 136, 222, 243-4, 389

Edderton 110

Edinbane 108

Edinburgh 63, 201, 382-9

EEA see European Environment Agency

efficiency, superior 129-30

Eko 250

EKOS Ltd 7, 179, 181, 381-2, 384

elasticity, very low price 141

electronic tagging 225, 376

Elf 15

Elgin 148, 152

Elgol 108

Elinoil 250

emission levels 215, 314, 371

reducing 225, 376

emission limits 203, 386-7

emission of gaseous pollutants 203, 386

emissions 193, 197-8, 203-4, 218-19, 266-7, 270, 278, 299-300, 306, 320-1, 327, 334-5, 342-3, 349-50, 356-7

level of 213, 266

vapour 202

Emo Oil 251

Enclosure 124, 126, 383

End price discrimination 3

Energy 216-17, 337, 339-41, 388

Energy Institute 11, 46, 55-7, 235, 381-3, 389

Energy Journal 389

Energy Products and Electricity 271, 278, 285, 292, 299, 306, 313, 320, 327, 334, 342, 349, 356, 363

400

engine size 269, 271-2, 328, 371

England 266-7

ENI Ente Nationale Idrocarburos) 238, 248, 253, 255, 381

Enterprise and Lifelong Learning Committee 63, 121, 165, 383-4, 388

entrants 128, 130

entry 120, 128-9, 131-2, 151, 179, 204, 384

post Supermarket 149

entry of supermarkets 17, 57, 149

environment 7, 185-6, 200, 205, 216, 218-19, 381, 385, 388, 390

transport and the 186

Environmental Policy 1, 4, 185, 375, 378

environmental problems 185, 207, 211-12

Environmental Resources Management (ERM) 173, 176, 183, 201, 385-6

Erg 254-5

ERM (Environmental Resources Management) 173, 176, 183, 201, 385-6

Escoffier, Anne-Marie 244

Espinosa, Maria Paz 262

Esso 15, 18-20, 47, 56-7, 141, 239-40, 243, 248, 251, 254-5, 257

Esso Highlander Service Station 114

Estuary 251

Eteka 250

EU 1, 45, 153, 169, 172, 181, 217, 225-8, 231, 233, 237, 256, 292, 334, 370-1

EU average price 261

EU Directives 269, 334, 341, 349, 362

EU markets 225

EU Member States 201, 271, 371

EU Petrol Vapour Recovery Directive 58

Euro Cents/Litre 247, 257, 263

Euro-Info Centre 389

Europe 3, 11-12, 45, 49, 104, 131, 136, 166, 200, 203, 250, 261, 321, 363, 372-3

European 2, 164, 166, 215, 247, 254, 261, 265, 390

European average price 261

European Commission 52, 166, 203, 215-17, 225, 249, 271, 300, 307, 376, 382, 384-8, 390

European Council 3, 259, 371, 377, 389, 391

European Council of Ministers 3, 259, 371, 377, 389, 391

European Court 153

European Directive 94/63/EC 200-1

European Economic Community 385

European Environment Agency 232, 388

European Legislation 171

European market 11

European marketplace 12

European motor fuel market 370

European Petrol Retailing 246, 249-50, 256, 259, 389

European, The 254

European Union 3, 171, 225-6, 231, 236, 256, 258, 260, 262, 385

EUROPIA 235-6, 389

euros 238, 272

Euros 203-4, 271-2, 278-9, 285-6, 292-4, 299, 306-7, 313-14, 320, 327, 334, 342, 349, 356, 363

Eurostat 234

Evans, Jonathan 385

Evanton 110

Evelix 118, 152, 154

evidence 49, 63, 65, 86, 121, 123, 134, 137, 140-1, 148, 152-4, 164, 173, 175, 180

excise duty 3, 250-1, 286, 300, 306, 313, 321, 326, 334, 349, 356, 363, 371, 377

consumption-based vehicle 219

lower 370, 372

lower rate of 256, 314, 364

new system Vehicle 293

401

Excise Duty in Sweden 364

excise duty rates 250, 342

Excise Duty Tables 271, 278, 285, 292, 299, 306, 313, 320, 327, 334, 342, 349, 356, 363

Executive Summary 1-2

exempt 170, 202, 245, 279, 285-6, 300, 328, 371

exemption 48, 175, 181, 202, 245, 279, 285, 315

exit 22, 132, 153, 243

Experian Catalist 149

Exports 193-6

external costs 212

Extra Cost to Highlands 155-6

Extra VAT 123, 155

F

F24 241

factors 7, 11-12, 134-6, 145-7, 180-1, 222

Fair Fuel Prices 148, 384

Fair Trading Act 167, 384

Fairer 213-14, 387

Farrington, John 53, 173, 176, 183, 213, 219, 382, 385, 387-8

Fax on Fuel Price Regime in France 389

Fax on Fuel Price Regime in Portugal 389

Fax on Fuel Subsidies in Rural Areas 389

Fax on Fuel Transport Subsidies in Sweden 389

Fearn 110, 114

File 68, 70, 87-9, 92-4, 96-8, 102-3

filling station closures 4, 105, 175, 379

filling station operation 120-1

Filling Station Throughput Litres 202

filling stations 44-5, 58, 63-4, 104, 117-18, 121-2, 136, 164, 175, 180, 201-2, 204, 234-6, 252-3, 378-9

rural 4, 58, 144, 175, 202, 244, 370, 372, 386

Filling Stations Remaining Open 105

Fina 11, 15, 254

Finances 243-4, 389

Financial Times 166, 169, 384

Finland 228, 232-6, 241-2, 299-300, 370-1, 390

Finnish market 241

Finnish Petrol Market 242

firms 130-1, 149, 169, 244, 254

fishing 286, 321, 328

FIXED ASSETS 157-62

flat market, relatively 11

fleet 222

Flodigarry 108

food 186, 263

forecourt 46-7, 382

Forres Road 117-18

Forsinard Hotel 112

Fort Augustus 108

Fortrose 110

Fort William 109, 111-12, 114, 116-17

four-star 26, 32

Foyers 108

France 22, 232-6, 242-4, 246-8, 261, 305-7, 370, 376, 391

France sets duty rates 243

Fraser & Son Ltd 118

French motor fuel market 247

French Petrol Market 243

402

French petrol market shares 243

Friars Bridge Filling Station 113

fuel 2, 7, 46-7, 56-7, 121, 136-7, 145-7, 152-3, 180-3, 216-17, 243-6, 259-60, 285-6, 363-4, 372

transporting 180

zero emission 379

fuel consumption 186, 213, 223, 293

fuel deliveries 7, 201

fuel duty 3, 32, 179, 207-8, 211-12, 217-18, 220, 224, 228, 246, 256-7, 371, 376-7

graduated 256

lower 370

motor 247

rates of 246, 251

reducing 252

fuel duty escalator 1-4, 26, 32, 45, 174, 184-5, 205, 207, 213, 215, 217, 223, 225, 266, 375-8

pa 268

Fuel Duty Escalator permanently removed 378

fuel excise duty 181

fuel market 137

urban motor 137, 223-4

fuel oil 243, 246

domestic 245-6

Fuel Price Anomalies in Caithness 384

fuel prices 2, 4, 32, 57, 121, 134-5, 137, 139, 141, 149, 152-3, 156, 176, 179-80, 384

competitive 138

higher 176

highest 86

highest motor 66

increased 177

lower urban motor 131

recommended large scale 213

retail 45

rural 181

Fuel Prices in Remoter Rural Areas 180

fuel stations 121, 179-80

fuel taxes 211, 213, 231, 370

funding 58, 122, 244, 246, 378

funds 3, 58, 64, 243, 246-7, 370, 372, 378

FUNDS 157-62

funds, rural transport 58, 122

furnishes 167-8

G

Gabriels 240

Gairloch 109, 111, 118

Galp 258, 260

Garage 111, 116, 118

Garve 110

Gas Oil 313

gases, greenhouse 265

gasoil 246, 263, 363

GB Oils 21, 154

GDP per capita 234

Geant/Casino 243

Genol 238

Geography 51, 137

German Petrol Market 248

German petrol station network 249

Germany 128, 232-4, 236, 248-9, 257, 261, 312-14, 370

403

Gleaner 56-7, 154

Gleaner Oils 56, 119, 158

Glenborrodale 109

Glenferness 109

Glenfinnan 108

Gollanfield 109

Gonzales, Felippe 260

Go On Group 241

government 32, 45, 164, 175-7, 180, 184-5, 205, 207, 216-18, 228, 266, 307, 371-2, 375, 377-9

local 164

Government's Fuel Duty Escalator 7

Graduated transport fuel excise 256, 389

grammes 335, 343, 350, 357

Grandi Reti 253

Grantown on Spey 107, 111-12

grants 59, 111-12, 181, 335, 364

block 64

graphs 7, 22, 25, 147, 186

Great Gas 251

Greater London 207

Greece 181, 228, 232-4, 236, 249-51, 269-72, 370, 390

Greek market 251

Greek NMVOC emissions 270

Greek Petrol Market 250

Greek petrol prices 250

Gross Price 87-8, 92-3, 96-7, 155

GROSS PROFIT 157-62

growth 5, 7, 222, 267

guide 154, 271, 278, 285, 292, 294, 299, 306, 313, 320, 327, 334, 342, 349, 356

guilty 167-8

Gulf 15, 18-19, 21-22, 154, 255, 257, 263

H

Halcrow Fox 63, 173, 175, 183, 204, 383, 385, 387

Hamilton, Neil 168, 385

Harris 63

HC see Highland Council

Hellenic 250

Helmsdale 110

HGVs 181, 294, 307, 321, 328, 350

HIAG group 2, 86, 148, 152, 173, 175, 177, 243, 248, 259, 382, 384

Hibbs, John 220-1, 388

HIE (Highlands and Islands Enterprise) 382

High petrol prices 135

high price strategy 66

High Street 113, 118-19

Higher petrol prices 55, 101, 177

Higher retail prices 156, 374

Higher rural fuel prices 177

Highland Council (HC) 58, 62, 70-82, 88, 93-4, 114, 119, 148, 176, 204, 252, 375, 383-4, 390

PED Committee Report PED 70-82, 88, 93-4, 383

Highland Fling Scotland Ltd 113

Highland Fuels 56-7, 374

Highland markets 134, 154

Highland Motor Fuel Demand 55

Highland motor fuel outlets 64

Highland Petrol Prices 385

Highland Price 103

404

Highland Regional Council (HRC) 168, 385

Highlander Service Station 114

Highlands 53-4, 56-7, 63, 67-8, 70, 72, 89, 94, 98, 101, 103, 117-18, 122, 125-6, 133

Highlands & Islands 1-2, 51, 53-4, 102, 133, 138, 142-4, 149, 152, 155-6, 168, 178-80, 200-2, 206-7, 373-4

Highlands and Islands Enterprise (HIE) 382

Highlands & Islands Lead Replacement Petrol Price Net 89

Highlands & Islands Motor Fuel Market 144

Highlands & Islands Partnership Programme 52, 382

Highlands and Islands 7, 53-8, 63-5, 86, 100, 121, 123-4, 128, 134, 141, 148, 173, 177, 180-1, 381-5

Highlands and Islands Action Group on Hydrocarbon Fuel Prices 2, 86, 148, 152, 173, 175, 177, 243, 248,

259, 382, 382, 384

Highlands and Islands market 51, 55, 67, 100, 133

Highlands and Islands motor fuel market 55, 128

Highlands and Islands of Scotland 51, 65

Highlands and Islands prices 100

Highlands Diesel Price Net of Duty 98

Highlands Unleaded Price Net of Duty 94

Hill of Fearn 112

HMSO 5, 7, 15, 186, 205, 380-7

Holland 232-3, 235-6, 342-3

Holloway, Ray 46

House of Commons Trade & Industry Committee 46, 173, 382, 385, 387

households 7, 186, 217, 232-3

Huerta, E. 391

HRC (Highland Regional Council) 168, 385

hydrogen 378-9

hypermarket forecourts 11

hypermarkets 11, 136-8, 243

I

IEA (International Energy Agency) 250

IES 255

Implement Price Caps 3

implementation 201-2, 244

implementing integrated transport policies set 217

implications 176, 181

Inchnadamph Hotel 113

Including Winter 68, 70, 72

income 213, 215, 234

Income Elasticity of Demand 135

Increased public transport spending 375

incumbents 128, 130-2, 151

independent retailers 46-50, 57, 63, 131-2, 137, 151, 178-9, 184

independents 138, 178-9, 251, 258

price of 48, 141, 178

individuals 139

Industrial Road Transport 193

industrie 243-4, 389

industry 44, 55, 57, 155, 165, 167, 174, 193-6, 337, 339-41, 373

fuel supply 3, 378

Inequity 213-14, 219, 387

inflation 3, 266, 371, 377

Innovation 165

Institute for Fiscal Studies 141, 212, 218, 387

Institute of Economic Affairs 220-1

Institute of Petroleum 11, 46, 55-6, 235, 381-3, 389

INTANGIBLE ASSETS 160-2

Intergovernmental Panel on Climate Change see IPCC

405

Intermarche 243

International Energy Agency (IEA) 250

introduction 214-15, 217, 221, 242, 321

Inver 110

Inverarnie Stores 112

Inverewe Service Station 111

Invergarry 108

Invergordon 110, 118-19

Inverinate Service Station 116

Invermoriston 108

Inverness 7, 51-2, 63, 65, 111-14, 117-18, 148, 152, 154, 179, 202, 381-5, 389

Inverness Chamber of Commerce 152

Inverness-shire 111, 113-14, 116-17

Invershin 110

investment 122, 170-1, 217, 225, 263

IP 254

IPCC (Intergovernmental Panel on Climate Change) 273-7, 280-4, 287-91, 294-8, 301-5, 308-12, 315-19, 322-6,

329-33, 336-40, 344-8, 351-5, 358-62, 366-9

Ireland 232-4, 236, 251-2, 319-21

Irish Market 251

Irish Petrol Market 251

island areas 120, 128, 370-1, 377, 379

islands 51-2, 64, 104, 147, 250

Islands 49, 51-2, 65, 142, 173, 181

islands market 51, 55, 67, 100, 133

islands motor fuel market 55, 128

Islands of Scotland 1-2, 51, 200, 208, 373, 377

islands prices 100

Isle of Skye 112-14, 116

ISLES PRICE 85

Ison, Stephen 221, 388

Italian market 253

Italian petrol market 254

Italy 228, 232-6, 252-4, 261, 326-8, 370-1

Italy's excise duty 328

J

Jet 238-9, 241, 263

JET/CONOCO 18-21

jet engines 245-6

Jetoil 250

Johansson, O. 141, 211-12, 218, 384, 387

journeys 211, 213, 220

K

Kentallen 109

key markets 51

kilogram 350

kilometres 7, 54, 214, 335, 343

Kiltarlity 108

Kinbrace 108

Kingussie 107, 112

Kinlochewe 109

Kinlochleven 109

Kinlochmoidart 108

Kirkhill 108

Kishorn Filling Station 109, 111

406

KULeuven 271, 390-1

Kupit 254

Kuwait 15, 19-20, 173, 255, 257, 263

Kyle (of Lochalsh) 108, 113, 116-17

Kylesku Hotel 113

L

Litres per Tonne (how many) 103

Laggan 107

Laidler, David 148, 384

Lairg 107, 110, 112-14, 116, 118, 154

LAQM (Local Air Quality Management) 264

Lead Replacement Petrol 26, 86, 313

leaded petrol 178, 203, 267, 269, 277, 285, 292, 299, 305, 313, 320, 334, 341, 349, 355

LEADED PETROL PRICES 83-5

Leclerc 243

legislation 164, 166-7, 171, 200, 217, 219

Less congestion 268

Less Pollution 268-9

Letter 166, 168, 384-5

levels 2, 53-4, 64, 135, 142, 144, 151, 153, 174, 178-80, 186, 207, 214-16, 220, 228

baseline 306, 313

levy 4, 183, 223, 244, 247-8, 279, 286, 293, 379

climate change 217

Lewiston 108

licences 218

limits 136, 170-1, 203-4, 215, 238, 244, 387

Liquefied Petroleum Gas see LPG

liquid fuels 386-7

sulphur content of 203

List of Filling Station Closures 105, 107-14

Lithuania 228, 234, 370, 376

Litman, T. 141, 211-12, 218, 384, 387

litre 7, 54-5, 86, 101, 121-6, 147-8, 152, 154-6, 177-9, 201-2, 238, 249, 251, 292-3, 321

Litre/kg 278, 285, 292, 299, 306, 313, 320, 327, 334, 342, 349, 356, 363

litre of fuel 2, 153

litre of motor fuel 100, 374

litre of petrol 293

Litres Sold 123-4

Livingingreece website 272

Livingstone, Ken 214

LMC (Long run Marginal Cost) 150

Local Air Quality Management (LAQM) 264

Local Authority Area 53-4

local market 45

Local Transport Measures 268

Local Transport Plans 269

Localised Monopolies in Rural Markets 120

locations 43, 64, 129, 134-6, 147, 152, 154, 207, 211, 237

Loch Ness 108

Loch Shiel Hotel 112

Lochalsh 113, 116-17

Lochcarron 118

Lochewe Service Station 113-14

Lochinver 110, 118, 121, 143

Lochshell Filling Station 114

locus 164-5

London 5, 7, 11, 15, 46-8, 141, 166, 168-9, 171, 186, 205, 211-12, 214-15, 268-9, 380-90

407

Long Road 111

Long run Marginal Cost (LMC) 150

Longman Road 117

lorries 279, 286, 294, 357

Louden, Derek W. 67, 382, 384

Low petrol prices 135

low price strategy 66

Lower Filling Station Throughput in Rural Areas 120

LPG (Liquefied Petroleum Gas) 247, 268-9, 278-9, 285-6, 292, 299-300, 306, 313-14, 320, 327, 334, 342, 349,

356, 363

LRP 306, 320, 327, 334, 342, 349, 356, 363

LukOil 240, 255

Luxoil 255

Lunan, Mike 123

Luxembourg 232-4, 236, 337, 339-41

Luxemburg 255-6, 333-5

Luxemburg motor fuel market 255

Luxemburg Petrol Market 255

M

Mace 112

MacCorquodale, Ken 384

MacDonald, Norma 243

Mackay Consultants 66, 68-85, 88-9, 93-4, 96-8, 383

Mackenzie 111, 118

Maclean, Cllr. Donald 63

MacPherson, Cllr. Duncan 168, 385

Maddison 138, 141

Maddison, David 141, 211-12, 218, 384, 387

Magee, Cllr. Alison 63, 384

Mallaig 109

majors 15, 130, 137-8

manufacturers 213, 217, 219, 225, 268, 376

map 58, 63

Margin composition for Road Fuels 124, 383

Marginal External Cost 211-12

margins 48, 65, 122-3, 137, 155-6, 178-9, 184

higher 2, 65, 123, 179

market 25-6, 47-9, 55, 57, 64-5, 100-1, 128, 130-5, 137-42, 144, 147-9, 153, 170-2, 225-7, 237-9

captive 136, 146, 151

common 171

competitive 149

concentrated 260

distinct 65

gasoline 261

geographic 180

individual 226, 237

island 133

national 172

open 321

profitable 65

regional 65

relevant 133

single 65

tourist 254

market concentration 11, 49, 57

market conditions 244

recent 373

408

Market Definition in UK Competition Policy 65, 133, 383-4

market players 248

market position, stable 132

market positions 131

market post 15

market power 48, 133

market price 136

market regulation 164

Market Share 27-9, 40-2, 175, 375

market structure, changing 137

Marketing Economies 129

Martin, J.P. 113-14

matter 65, 164, 166, 172, 181

Maxol 251

Mayor of London 214

Mean, Summer 68, 72

measure market concentration 58

measures, national 226, 264

mechanical diggers 245-6

Melvich 107

Mem ber State 232-3

member states 169, 171, 202-3, 228, 234-7, 261, 371, 386

miles 63, 143, 153

Military Air & Ship 195-6

Military Aircraft 193-4

Millburn Road 113-14, 117

Miller, Harry 200, 386

Milton 117

Minch View 111

mini-majors 15, 129

Ministere de L’economie des Finances et de L’industrie 243-4, 389

Ministers 165, 168-9, 244

opposition Transport 86

MMC 15, 40, 46, 48, 56, 58, 66, 121, 140-1, 144-5, 149-50, 165, 167, 172-4, 178, 380

MMC Report 15, 18, 64, 66, 120, 145, 149, 174, 380

Mobil 11, 15, 18-19, 22

models 144-5, 182

urban 144

modernisation 243

MOL 238

Molander, Mans 389

monitoring 164-5, 174, 183

Monopolies and Mergers Commission 15, 165, 380-1, 383, 385

monopoly 128-9, 260

complex 145

monopoly profits 66, 128, 149-50, 178-9

Monti, Mario 46, 172

Morar 108

Moray 52-4, 152, 179

Morrisons 21, 154

motor fuel business 137

motor fuel demand 54, 104, 228

motor fuel emissions 203

motor fuel industry 2

motor fuel market 1, 51, 58, 132, 134-6, 164-5, 172, 239, 373-4

rural 156, 222-3

motor fuel market shares 258

Motor Fuel Markets Prices and Taxes 67

Motor Fuel Markets Prices and Taxes Annual Review 382

409

motor fuel outlets 63

motor fuel prices 3, 133, 137, 166, 173-4, 226, 260, 376, 379

motor fuel products 11

motor fuel retail market 11

motor fuel retail outlets 44, 247

motor fuel retailers 164

motor fuel retailing 2, 131

motor fuel sites 63

existing 247

motor fuel standards 225, 376

motor fuel tanks 204

motor fuels 65-6, 134-8, 141-2, 146-7, 164-5, 174-5, 215-16, 225-6, 291-2, 299-300, 305-6, 326-7, 334, 374-6,

379

available supplying 146

cheap 104

classes 263

current 278

existing 320

modern 263

selling 260

supply of 57, 260, 372, 377

supplying 147

motor vehicles 54, 203, 225, 279, 386

positive ignition engines of 203, 386

refuelling of 202-3, 387

motoring 218, 223, 225, 376

motorists 22, 45, 47, 143, 146, 168, 181, 185, 206-7, 216, 218, 220

motors 53, 172, 213, 245-6

fixed 246

Motorway Cars Petrol FS 114

motorways 357

movement 65, 67, 152

mpc (Marginal Private Cost) 223

msc (Marginal Social Cost) 223

MtC (Million Tonnes of Carbon) 217, 265, 268

Muir of Ord 109, 111-12, 118

Mumford, Peter 213-214, 219-20, 387

Murco 15, 18-21

Mure, Isabelle 243-4, 389

N

Nairn 109, 111, 113, 117-18, 154

National Economic Research Associates (NERA) 65, 133, 179, 383-4

National Prices & Mkt Shares 183

National Statistics 383

NERA (National Economic Research Associates) 65, 133, 179, 383-4

Neste Oil 242

Netherlands 228, 234, 256-8, 261, 341-2

network 15, 17, 22, 26, 56, 66, 100, 237, 376

fuel retailing 243-4

Newbery, David 211-212, 387

New Internationalist 235, 389

News of the World 45, 382

Newtonmore 107

nitrogen dioxide 200, 203, 265

Nitrogen Oxide 300, 313, 320, 327, 342, 349, 356, 363, 386

Nitrogen Oxide Emissions 193, 270, 339

nitrogen oxides 185, 267-8

410

NMVOC emissions 270, 278, 286, 293, 300, 307, 314, 321, 327, 335, 341-2, 350, 357, 364

noise 215, 220-1

Norman, Chris 46

Norman Motors, 45-7

north 143, 148, 152, 206, 251-2

North Kessock 112-13

North West Scotland 55, 86, 177-8

Northern Ireland 65, 251-2

NOx 204, 270, 327, 335

NWE CIF (North West Europe price Including Cost, Insurance, Freight) 103

NWE CIF price for MGO (Marine Gasoil) 121

O

Object or effect 170-1

Octa+ 239-40

OECD (Organisation for Economic Co-operation & Development) 234, 388

Oesterreich, Ellen 248, 389

offence 167-8

Office of Fair Trading see OFT

Office of National Statistics (ONS) 190-1

Official Report 63, 121-2, 165, 383-4, 388

OFT (Office of Fair Trading) 2, 46-50, 55-7, 64-5, 123-4, 133-4, 137-8, 141, 144-5, 154-5, 164-6, 174-5, 177-

80, 183-4, 382-5

oft/markets-work/OFT 49, 382, 385

OFT Petrol & Diesel Pricing 173

OFT Price and Choice in Rural Communities 173

OFT Report 58, 67, 104, 130, 133, 144

OFT UK Petrol & Diesel Sector 173

oil 11, 32, 45, 47, 64, 130-2, 136-8, 142, 147, 153, 172, 177, 244

Oil & Energy Trends 381

oil companies 2, 11-12, 46-7, 64, 137, 143, 151, 172, 179, 182, 184, 373, 375

oil majors 12, 22, 57, 66-7, 131-2, 138, 141, 149, 151, 172

Oil Majors' Case 149-50

oil majors set prices 144

oil price shocks 32

oil prices 32

higher crude 49

rising crude 26

OK 241, 263

Oliveira, Esmeralda 389

OMV 238

Operating Cost 122, 155-6

order 121-2, 186, 223, 243-4, 261, 271

Organisation for Economic Co-operation & Development (OECD) 234, 388

Orlen 248

Orkney 52-4

ORKNEY PRICE, Leaded Petrol 84

outlets 17, 22, 44-5, 47, 64, 135, 137, 142, 147, 175, 201-2, 241, 253, 374

competing 146-7

individual 135, 140, 142-3

outturn 334, 342, 349, 356, 363

outwith 135, 375

owners 44, 56, 253, 328, 335

resource 128

ownership 53, 233-4, 271, 321

Ownership Tax 328

Oxford 44, 171, 212, 381, 384-5, 387, 389

OZ Energia 258

411

P

Palacio, M. Blanca 261, 391

paraffin 245-6

Paris 11, 206, 234, 244, 388-9

parking charges 3-4, 217, 219, 269, 372, 377-8

Parliament 165

Part II 271, 278, 285, 292, 299, 306, 313, 320, 327, 334, 342, 349, 356, 363

Part III 271, 300, 307, 390-1

PARTICULATE EMISSIONS 196

parties 131, 170, 172, 208

trading 134, 170-1

pattern

settlement 51

transport-efficient 206

peak 22, 32, 212-13, 278, 320, 342, 349

Pearce, D. 138, 141, 211-12, 218, 384, 387

PED Committee Report (Highland Council) 70-82, 88, 93-4, 383

Pennyland Service Station 116

petrol 65-6, 129-30, 135-6, 138-9, 173-5, 177, 200-1, 203-4, 226-8, 243-4, 247, 250, 259, 380-3, 385-7

free 254, 370, 390

price of 136, 173

sites retailing 57

specification of 203, 387

supply of 47-8, 64, 129, 145, 263, 382-3

Petrol & Diesel 121

Petrol & Diesel Pricing 382, 385

Petrol and Derv Prices 381

Petrol and Diesel Pricing 49, 180, 383

petrol costs 178-9

PETROL-ENGINED ROAD VEHICLES 197

Petroleum Industry Association (PIA) 44

Petrol Filling Station 116-17, 222

petrol market 174

rural 120, 128-9, 141

Petrol Price Net of Duty 89

petrol prices 51, 66, 135, 138, 142, 149, 226

lower 49

petrol retailers 64, 178

Petrol Retailers Association 44, 182, 381-2, 386

Petrol Retailers Association Membership Service Guide 381

petrol retailing 44, 63-5, 129, 173-4, 381-2, 385, 387

petrol stations 63-4, 116, 129, 178, 201

Petrol Stations in Rural Scotland 173, 176, 385-6

Petrol Vapour Recovery 202, 386

petrol vehicles 264, 343

Petrol Vehicles & Industry 265

Petroleum Industry Association (PIA) 44

Petroleum Prices 175

Petroleum Prices and Distribution 63, 173, 383, 385, 387

petroleum product prices 250

Petrol Retailers Association (PRA) 47, 133, 172, 202

Petroleum Retail Market 222

Petroleum Review 11, 19-20, 27, 41-2, 46, 101, 126, 252, 382

Petronor 260

Petter, C. K. Bruce 47, 202, 386

PHH 69, 71, 73-85, 94, 96-8, 383

PIA (Petroleum Industry Association) 44

412

Platt's prices 130

PM10 265, 267-8

policies 63, 165, 205, 215, 218-19, 225, 271

current 181, 224

current fuel duty 180

present 185, 200, 207

social 3, 372, 375, 378

policy areas 2-3, 165-6, 377-8

pollutant emission levels 314

pollutants 185-6, 208, 215-16, 224, 264-5, 270, 278, 371

polluter 200, 205-6

pollution 3, 138, 185-6, 200, 203, 205, 207-8, 216, 218, 220-2, 224-5, 256, 264, 372, 376-7

air 203, 266, 386

reducing 3, 215-16, 220

pollution levels 186, 218, 224-5, 266, 376

Poolewe 111, 113-14

population 51-3, 135, 137, 206-7

population density 51-2, 104, 373

Port Henderson 111

Portmahomack 110

Portree 109, 113, 116

Portugal 232-4, 236, 258-9, 348-50, 370

Portuguese Petrol Market 258

position 26, 44, 57, 64, 132-3, 140, 142, 150-1, 177, 223, 225-6, 237, 239, 243, 252

optimal 223-4

present 222-3, 271

power 59, 168, 174, 239-40, 261, 307, 357

engine 278, 286, 314, 321

reserved 164-5

filling station company 239-40

power generation 267

Power Generation & Industry 265

Ppl (pence per litre) 68, 70, 72, 83-5, 89, 94, 98, 101-3, 121-3, 126, 149, 155-6, 259, 263

PPP (Purchasing Power Parity) 234

PRA (Petrol Retailers Association) 47, 133, 172, 202

practices, concerted 169, 171

predation 137-8, 151

Predatory Pricing in Urban Markets 120

Preem 263

premium price 136

Press & Journal 67, 70-82, 88, 93-4, 96-8, 383

prevention 170-1

Price and Choice in Rural Communities 173, 382, 385

price capping 375

Price Caps 372, 376-8

price ceilings 250, 370

price competition 48

intensified 47

price dichotomy 120

rural 1, 120, 149, 156, 374

price difference 83-4, 89, 94, 98, 101-3, 134, 148, 154-6

intra-firm 152

price difference diesel 102

Price Difference Maximum 261

Price Differential 57, 67, 104, 152

highest 67

price differentials net 86

price discrimination 66, 86, 120, 133-4, 147-8, 156, 260, 374, 378

price disparities 375

413

Price Elasticity of Demand 134

Price Elasticity of Supply 136

price givers 135

price gouging 57

Price Including Duty 125-6

Price Net of Duty 125-6

price premium 121

price problems 2

Price Reductions 183

price regulation 166

ceiling 260-2

price signals 141

price structure 149, 179

price support 46-7, 64

effective 47

price takers 135, 141

price war 140

prices 3-4, 32, 47-9, 63, 65-8, 103, 128-30, 135-48, 151-6, 177-81, 211-13, 237-8, 260-2, 374, 376-9

administered 260

ceiling 260-1

cheapest 49

down 100

existing 143

extra 136

floor 139

high 132, 140, 153

higher 49, 65-6, 86, 100, 121, 148, 151, 178, 180, 256, 370

highest 86, 147

import 293

low 132, 226

lower 45, 147, 179, 253

maximum 260

minimum 48, 139

national 375

raised 3

selling 134, 170-1

setting 63, 144

small 139

urban 225

prices net 86

lowest fuel 137

PriceWatch campaign 47

pricing 48, 132, 151, 168, 180-1

rural petrol 166, 384

product differentiation 129

Production Road Transport 195

products 26, 44, 56, 129, 134, 143, 168, 245-7

petroleum 245

PROFIT 157-62

profits 55-6, 128, 131, 147, 151, 174, 180, 260, 374

programmes 86, 244, 265

promotion 203, 387

propulsion 245-6

protection 128, 153, 184

provisions 51, 63, 168, 170, 172, 202, 244

public transport 3-4, 53, 135, 146, 177, 205-6, 213, 217, 219-20, 314, 343, 376, 378-9

available 142

local 279

reliable 213

414

unavailability of 142, 206

public transport alternatives 141, 147, 211

public transport fares 372

public transport links 104, 373

public transport providers 292, 371

public transport services 186, 378

Public transport use 314

Pump (Gulf) 263

Pump Prices 49, 71, 73-82, 88, 93-4, 96-8, 180

pumps 55, 177, 181

purchase 44-5, 50, 143, 153, 364

fix 170-1

purchase price 135, 293

Q

Q8 18-20, 239-41, 255, 257

Q-Star 263

quantities 139-40, 145-6, 151

R

RAC (Royal Automobile Club) 268

Rack prices 175

Raiffeisen 248

rates 51, 66, 137, 179, 234, 244, 249, 251, 259, 262-3, 299, 313-14, 320-1, 356-7, 362-3

lower 100, 181, 218, 246, 263, 271, 314, 321, 328, 349

rates of duty 238, 251-2, 271, 278, 292, 328, 364

Rates of Vehicle Excise Duty 314

RCEP (Royal Commission on Environmental Pollution) 7, 186, 200, 205-7, 211, 213, 216-19, 224, 381, 385,

388

receipts

collected fuel duty 376

use fuel duty 4, 379

recession 7, 231, 313, 321, 327

recommendations 1, 3, 165-6, 174-6, 180-1, 205, 219, 371, 376

Recovery Directives 175

redistribution 223-4

Reduced congestion 268-9

reduction 11, 175, 180-1, 186, 204, 216-17, 220, 223, 225, 266-7, 278, 306, 313-15, 327-8, 334

referrals 165

refiner 32, 104, 372, 374

refineries 11-12, 57, 136-7, 175, 193, 201, 260

Refunds of duty on Diesel 238

region 51-2, 64, 86, 104, 178, 243, 253, 258-9, 307, 328, 357, 390

registration 7, 272, 335, 350

Registration Tax 307, 350

regulations 2, 151, 172, 202-4, 260-1, 263, 375, 385-7, 391

reluctance, marked 142

remit 164-5

remote areas, most 175

remote locations 178-9

remoter 180

Replacement Petrol 66-7, 87-8

REPLACEMENT PETROL PRICES 68

Report on Fuel Prices in Orkney 384

Repsol 258, 260

Resale Price Maintenance 48

Research Note 246, 249-50, 256, 259, 389

415

resources 128, 244

restrictions 48, 170-1

retail margins 65, 122, 155-6, 262

retail market 15, 32, 151

Retail Marketing Survey 19-20, 56, 101, 126, 383

retail motor fuel outlets 66

Retail Outlets Supplied 18-20

retail price standards 11

Retail Price Trends 32

retail prices 32, 45, 66, 104, 121-2, 125-6, 136, 228, 261, 374

gasoline 262

high 65, 153

highest 45

wholesalers set 179

retail sites 44, 136, 143-4, 373, 375

wholesaler's 153

Retailer Margin 104, 126

retailers 32, 45-50, 59, 64, 120, 122-5, 128, 132, 135-40, 143-4, 153, 155, 172-3, 183-4, 374-5

rural 153, 155-6, 175, 374

supermarket 132

retails, new motor fuel 164

RETURN 157-62

revenue 32, 45, 145, 147, 155, 177, 207, 217, 219, 252

Review Group on Acid Rain 387

Revoil 250

Rhône Alpes 248

Richard-Jones, David 384

Richards, Patsy 246

Ridley, Nicholas 169

risen 7, 12, 136-7, 215, 270, 313, 334, 342, 356-7, 364

Rivista Italiana Petrolio 253, 390

RMI Petrol 44

road 45-7, 54, 112-14, 116-18, 136, 186, 210, 213-14, 217-21, 224, 263, 307, 387-8

road diesel 259

ROAD FUEL CONSUMED 101

road fuel duty 212

Road Fuels 124, 212, 363, 383

road pricing 205, 207, 217, 220-1, 314, 388

road tanker 201

road tax 177, 321, 328, 335, 343, 357, 364, 377

road tax disc 307, 314

road tolls 294, 364, 372, 377-8

road transport 141, 185-6, 192-6, 210-12, 219-21, 224, 265-6, 314, 384, 387

Road Transport & Power Generation 265

road transport sector 207

road transport sources 267

road transportation 216

Road Type & Time 212-13

road use, true costs of 214, 387

road users

rural 214, 220

urban 214, 220

Robertson, Cllr John D 55, 100, 153-4

Robertson, Brigadier Sydney 55, 100, 153-4

role 47-8, 164-5, 181, 185, 205, 373

Rome 253, 385, 390

Rosehall 113

Rosemarkie 110

Ross-shire 56, 111-14, 116, 118-19

416

Rotterdam Spot Market 130

Royal Commission on Environmental Pollution (RCEP) 7, 186, 200, 205-7, 211, 213, 216-19, 224, 381, 385,

388

Royal Garage 111

Roy Bridge 108

RSPS (See Rural Scotland Price Survey)

rubrique 243, 389

Rudden, B. 171-2, 385

Rugby 47, 202, 381-2, 386

Rural 66, 141, 185-6, 211-13, 259

rural areas 3-4, 55-6, 65-6, 120, 122-3, 141-2, 174-7, 180, 183, 186, 207-8, 212-13, 223-5, 248-9, 370-9

rural fuel price equation 181

Rural Funding Sources 176

rural marketplace 131

rural markets 120, 131-2, 140, 144, 156, 374

rural motorists 3, 141, 143, 205, 222, 253, 260, 370, 376, 378

Rural Petrol Stations Scheme 205, 387

Rural prices 149

high 66

Rural Scotland 2, 173, 176, 213, 385-6

Rural Scotland Price Survey 66, 68-85, 88, 93-4, 96-8, 383

S

Safeway Supermarket 119

Sainsbury's Petrol Filling Station 21, 118

Salen 108

sales 22, 56-7, 100, 122, 135, 147, 175, 200, 243, 374

Sales Tax 279, 286, 293, 300, 307, 314, 371-2, 377

scale 43, 129, 131

Schabas, Michael 220, 388

schemes 58, 214, 246-7, 249, 254, 268-9, 314, 335, 372, 376

Sconser 108

Scotland 51, 53-4, 56, 65-6, 104, 178, 181, 213, 237, 254, 264

Scotland Price Survey 66

Scotland Total Vehicles 53-4

Scottish average prices 100

Scottish Consumer Council 213, 219, 387-8

Scottish Executive 58, 122, 181-2, 205, 382, 387

Scottish Fuels 55-7

local wholesalers 57

Scottish Motor Fuel Demand 54

Scottish Office 172-3, 176, 183, 201-2

Scottish Office Central Research Unit 201-2, 382, 385-6

Scottish Parliament 63, 86, 121-2, 164-5, 173, 180, 238, 246, 249-50, 252-3, 256, 259, 264, 383-4, 388-9

Scottish transport authority 219

Scottish Transport Statistics 53-4, 382-3

Scourie 110

scrap 3-4, 268-9, 271, 371, 376, 378

seats 117, 357

Secretary of State for Trade 168, 173-4

sector 11, 32, 46, 217, 252, 261, 265, 337, 339-41

independent 48-50, 138

retail 12, 22, 131

supermarket 22

SEK (Swedish Kroner) 364

selective price 140

operated 145

417

Selective Price Support see SPS

sellers 133

SEO Co-op 242

SEPTEMBER 83-4

Service Station 117

service stations 46, 172, 201, 203, 387

services 3, 51-2, 129, 134, 146, 168, 228, 286

Session 173, 385, 387

set 11, 45, 58, 65, 133, 143-5, 173, 178, 185, 220-1, 244, 260-2, 265-6, 307, 342-3

target 278, 285, 327, 334, 356

set prices 66

Share 239, 248, 250, 257, 260

Share of Sites 238, 240-3, 255, 258, 263

Share of UK Market 18-20

SHAREHOLDERS 157-62

Shell 12, 15, 18-20, 56-7, 121, 141, 238-42, 248, 254-5, 257, 260, 263

Shell sites 56

Shetland 52-4

SHETLAND PRICE 83

Shieldaig 109

shop 47, 64, 112, 116, 129, 140

Sidaway, Roger 173, 176, 183, 201, 385-6

site numbers 253

sites 15, 17, 22, 43-6, 56-9, 64-6, 121-2, 136-7, 139-44, 147-8, 153, 174, 179, 251-4, 373

company-owned 48, 130, 141, 178

high volume 22, 122

high volume fuel 4

independent 2, 4, 32, 43, 50, 63, 104, 137, 179

individual 134, 140-1, 178

located 134

new 138, 202

rural 4, 66, 122-3, 144, 146, 379

supermarket 17, 26, 130-1, 147, 154, 263

unprofitable 22

urban 144, 200

situation 22, 48, 65, 134, 138, 147, 151, 172, 176, 184, 215-16, 221, 243, 252-3, 256

present 223-4

stable market 132

volatile market 132

Sixth Report 173-4, 382, 385, 387

skills 165

Sligachan 108

Smith 111

SO2 emissions 286, 306, 327, 335, 342, 357

SO2 emissions in Austria 278

social costs 211-12, 214, 218-20, 223-4

Social Trends 192-6, 380, 382, 385

society 220-3, 225

Solus Ties 45, 47, 104, 373

Solvent use Road Transport 194

sources 5, 55, 68, 70, 72, 89, 98, 101, 149, 185, 194-6, 216, 246, 251, 264

cheaper 47

natural 268

renewable 203, 387

road transport combustion 267

tackling 377

Spa Service Station 112

Spain 232-4, 236, 250, 259-62, 355-7, 370

Spanish Gasoline Market 261, 389, 391

418

Spanish Government 260-1

Spanish market 260

Spanish motor fuel market 262

Spanish NOx emissions 356

Spanish Petrol Market 260

Spanish retail Gasoline Market Departamento 391

Spar Shop 112-13

Spean Bridge 109, 112, 114

Special Features 5, 45, 51, 63

Spey 111-12

Spot 103

Spot Prices 123-6, 261, 383

Springer-Verlag 128

SPS (Selective Price Support) 46-7, 140, 373

square 112, 132-3

ST1 242, 263

Staffetta News 253, 390

Staffin 108

Stage II of Vapour Recovery Directive in Rural areas 183

Standard & Poor's DRI 271, 300, 307, 390-1

Star 27, 102

Star Derv 27-9

state 2, 48, 51, 133, 165, 167-8, 173-4, 185, 216, 225, 260

Station Road 112-13, 117

Stationery Office 171, 217, 382, 384, 388

Statistical Review of World Energy 381, 388

Statoil 241, 263

stop 47, 137, 184

storage depots 201

Stores 112, 117

Stratherrick 108

Strathpeffer 109, 112-13

Strontian 108

Structure of Supply 5, 11, 51, 55

subject 45, 169-72, 181, 204, 226, 245-7, 261, 293, 307, 321, 328, 335, 350

subsection 168, 170

subsidies 3-4, 217, 263, 379

Substitute Petrol 306, 320, 327, 334, 342, 349, 356, 363

sulphur 270, 300, 387

sulphur content 249, 314, 386

Sulphur Dioxide 185-6, 203, 265, 267-8, 270, 292, 300, 320, 327, 342, 350, 356, 364, 386

Sulphur Dioxide Emissions 195, 340

supermarket firms 12, 130

supermarkets 2, 17, 22, 26, 32, 43, 46-7, 57, 130-2, 144, 149, 151, 222, 247, 256

supplementary obligations, parties of 170-1

Supplier and Retailer Organisations 44

Supplier Retailer and Consumer Associations 5

suppliers 48, 139, 141, 143, 153, 172, 179

supply 5, 11, 45-7, 51, 55, 57, 86, 129-30, 136-7, 139-40, 142-3, 153, 178-9, 373-4, 377-9

largest wholesalers 373

source 57

sources of 66, 138, 170-1

supply chain 32, 65, 86, 100, 123, 129, 174, 215, 374

supply of food 263

Supply of Petrol 47, 55, 57, 173, 177, 200, 380-3, 385-6

Supply of Petrol fig 40

Supply of Petrol to Retailers 173, 385

supply retailers 156

support 4, 47, 122, 136, 140, 145, 213, 216, 218, 259, 375, 379

419

Sustainable Transport Policy 213, 219

Sustainable Transport Policy and people living in Rural areas 219

Sustainable Transport Policy and People Living in Rural Areas 213, 387

Sutherland 56, 112-14, 116, 118, 121, 152

Sutherland Transport & Trading 112

Sutherland Transport and Trading 112

Sweden 228, 232-4, 236, 262-4, 291, 362-4, 370

Sweden's diesel 370, 376

Swedish motor fuel 262

switch 7, 135-6, 139, 141-2, 186, 253, 269, 335

system 46-7, 141, 166, 211, 243, 246, 260, 328, 343, 370

sustainable transport 219

System U 243

T

table 5, 7, 52-4, 123, 152, 154-5, 213, 233-4, 245, 264, 266, 285, 292, 299, 306

Tain 110, 112, 118-19, 152, 154

Talmine 107

Tamoil 248, 254-5, 257

Tango (Kuwait) 257

tank replacement 104, 122

tanks 44, 58-9, 62-3, 143, 148, 204, 382

Tarvie Services 113

tax 3-5, 157-62, 211-12, 215-18, 226-8, 244-8, 271-2, 285-6, 292-4, 299-300, 306-7, 313-14, 320-1, 342-3,

356-7

lower rate of 245

tax revenues 223-4

taxation 214, 223-4, 228, 370

Taxe Intérieure de Consommation sur le Gaz Naturel (TICGN) 247

Taxe Intérieure de Consommation sur les Produits Energétiques (TICPE) 247-8

Taxes on Unleaded Petrol 370, 376

Taylor, Deirdre 87, 92, 96, 381

Teboil 242

Technology 87, 92, 96

teeth 169

Telford Street 113

Tesco Petrol Filling Station 21, 118

Tesco Petrol Station 21, 117-18

Tesco Supermarket 21, 117-18

Texaco 15, 18-20, 22, 239-40, 251, 255, 257

The European 254, 390

Theoretical Treatment 128, 384

The Stationery Office (TSO) 382, 384

threat 143, 377

Three-Firm Concentration Ratio 57

throughput 17, 26, 179, 181, 202, 252

annual 178, 201-2

level of 122, 136, 164

lower 121-3

Thurso 107-108, 111-12, 116, 148

TICGN (Taxe Intérieure de Consommation sur le Gaz Naturel) 247

TICPE (Taxe Intérieure de Consommation sur les Produits Energétiques) 247-8

time 2, 11, 17, 47, 53, 56-8, 67, 86, 131, 142, 148-9, 214-15, 221-2, 250, 271-2

extended period of 66

Time of Use 212-13

Tinq (Gulf) 257

tolls 3-4, 217, 357, 379

420

Tomdoun 108

Tongue 108

tonnes 102, 270, 278-9, 285-6, 292-4, 299-300, 306-7, 313-14, 320-1, 327-8, 334-5, 342-3, 349-50, 356-7,

363-4

million 268, 270

tonnes of CO2 emissions 278, 285, 327, 356

Tonnes of CO2 Equivalent 185

tonnes of Sulphur Dioxide emissions 320, 364

Top 251

Topaz 251

Torness 108

Torridon 114

total cost price 321

TOTAL DIESEL CONSUMED 101

Total Differential 155-6

Total Extra 123-4

Total price difference 102

Total UK Emissions 185-6

TOTALFINA/ELF 18-21, 239-40, 243, 248, 255, 257-8

towns 65, 207

tractors 245-6, 279

trade 15, 134, 165, 168, 170-1, 174

Trade & Industry 32, 168, 173-4, 204, 381

Trade & Industry Committee 46, 172, 174

Trade Committee for Fuel Distribution 243

trains 135, 138, 245-6, 372

transactions 2, 156, 171, 374

equivalent 134, 170

transport 185-6, 192-6, 270-1, 292-3, 299-300, 306-7, 313-14, 320-1, 327-8, 334-5, 339-43, 349-50, 356-7,

363-4, 380-1

rail 328

reduced 278

transport accounting 270, 292

transport accounts 286, 299, 320

transport activities 270, 342

Transport and Regional Affairs Committee 217

Transport Base Case 271, 300, 307, 390-1

transport costs 130, 207, 258

transport emissions 300, 306, 313, 320

Transport Exports 194

transport facilities 216

transport fuels 217

transport plan, green 269

transport policy 3, 205, 378

Transport Scotland 209-10, 383

transport sector 270, 292, 306

transport sources 267, 278

Transport Statistics of Great Britain 5, 380

Transport Statistics of Northern Ireland 53, 383

transport subsidy 263

Transport Waste Treatment 194

Transport White Paper 217

transportation 124, 156, 259

Transport's CO2 emissions 292

trend 22, 32, 222, 231, 266

upward 222, 270, 278, 285, 313, 363

Trends 5, 7, 32

trucks 248, 314, 364

True Costs of Road Transport 141, 210-11, 384, 387

421

True Costs of Road Use 213, 219

TSO 382, 385

Turmol 238

turnover 55-6, 130, 157-62, 181

twenty-fourths 259

Twenty-second Report 216-17, 388

type 45, 204, 307

U

UFIP 243-4, 389

UK 2-3, 15, 44-9, 53-8, 63-5, 70, 100-4, 124-6, 169, 171-3, 177-80, 214-16, 222, 226-8, 373-8

UK and Highland Lead Replacement Petrol 90

UK average 54, 68, 70, 72, 86, 122, 178-9, 213

UK context 166

UK Emissions Map of SO2 London 388

UK Environmental Pollution 185

UK Independents' Market Share 383

UK law 169, 171

UK Legislation 167, 169, 171, 184

UK Marginal External Costs 212-13

UK market 15, 26, 50, 57-8, 63, 104, 122, 149, 154, 177-9, 225

total 17

UK motor fuel 100

UK Motor Fuel Demand 54

UK motor fuel market 11, 49, 54, 138, 148-9, 372-3

UK Motor Fuel Market 1, 5, 26, 147

UK Motor Fuel Retailing 149

UK Motor Fuel Sales 27-9

UK Petrol & Diesel Sector 382, 385

UK petrol market 120, 177

UK Petroleum Industry Association (UKPIA) 382

UK Petroleum Retail Market 388

UKPIA (UK Petroleum Industry Association) 382

UK Pollution 185-6

UK PRICE 83-5

UK Prices 100, 103-4, 126

UK Retail Marketing 56

UK Retail Marketing Survey 11, 41-2, 55, 252, 381, 389

UK Retail Marketing Survey fig 27

UK Retail Site Ownership 40-2

Ullapool 109, 112-13, 117-18

undertakings 134, 169-71

UNECE (United Nations Economic Commission for Europe) 232-3

UNFCCC (United Nations Framework Convention on Climate Change) 185, 273-7, 280-4, 287-91, 294-98,

301-5, 308-12, 315-19, 322-6, 329-33, 336-40, 344-48, 351-5, 358-62, 365-9

Unione Petrolifera 253, 390

unitary competition authority 166, 169, 384

United Kingdom 65-6, 134, 145, 167, 170, 173, 234, 261, 264, 382, 385, 387

Unleaded 26, 28-9, 102, 125-6

Unleaded Petrol 32, 86, 92-3, 178, 186, 226, 228, 251, 271, 278, 313, 334, 356, 363, 370

Unleaded Petrol in Italy 370

Unleaded Petrol Price 103

UNLEADED PETROL PRICES 70, 370

Unleaded Price Pence 152, 154

Unleaded prices 67

Uno-X 241

Ups and Downs of pump prices 70, 72, 383

Urban 1, 120, 185-6

422

Urban and Rural Areas 120, 133

urban areas 3, 49, 55, 65, 134-5, 141-2, 177, 186, 207-8, 211-12, 216, 224-5, 256, 372, 375-8

Urban Central 212-13

urban markets 46, 120, 132, 134, 136-8, 141, 147, 151, 156, 374

urban problem 200, 205

urban road pricing 220-1, 388

urban/rural price dichotomies 226, 237

Urban/Rural Price Dichotomy 382

usage 135, 245

commercial 170-1

users 176, 213, 217, 219

essential 379

Using fuel duty receipts 225

V

vanish 50

van Miert, Karel 166, 384

Vapour Recovery Directive (VRD) 122, 202, 375

VAT 86-8, 92-3, 96-7, 100, 123-6, 153, 155-6, 181, 249, 251-2, 262, 293, 307, 313, 320-1

rate of 237, 247, 259, 262, 305, 326, 334

VED 177, 181, 217-18, 321

vehicle age 364, 371

Vehicle Excise Duty 181, 211, 286, 300, 307, 314, 321, 328, 335, 343, 350, 364, 372

Vehicle Excise Duty in Austria 278

Vehicle Excise Duty in Spain 357

Vehicle Excise Duty Reduction 183

Vehicle Excise Duty reductions 181

vehicle km 212-13

Vehicle Licensing Statistics 5, 53, 380

Vehicle Ownership 5, 51, 53

vehicle types 245, 357, 364

vehicles 53-4, 139, 146, 204, 217-18, 279, 293-4, 314, 321, 328, 343, 350, 357, 364, 372

engined 364

older 3, 268, 335, 377-8

polluting 268, 335, 372

vehicles travelling 293

Verhoef, E. 141, 211-12, 218, 384, 387

Vertical Contracts in Petrol Retailing 44, 381

veto 165-6

Viewfield Filling Station 112

visitors 254, 390

VOC see volatile organic compound

Vol 221, 253-4, 261, 388-91

volatile, non-methane 267-8

volatile organic compound (VOC) 194, 200-1, 203, 267-8, 386

volume 15, 22, 26, 102, 135, 137, 139, 148, 178-9, 186, 285

von Weizsacker, C.C. 128, 131-2, 384

VRD (Vapour Recovery Directive) 122, 202, 375

W

Waste 337, 339-41

Waste Treatment 192, 196

Watten 107

weight 279, 286, 294, 321, 328, 343, 350, 364

Weighted Average Price Difference 102

Weizsacker, C.C. Von 128, 131-2, 384

welcome 207, 217

423

West End Garage 116-17

Western Isles 53-5, 57-8, 145-6, 180, 200-1, 374, 386

Westminster Parliament 164-5, 172

Whitebridge 108

Wholesale Petrol Price Reductions 176

Wholesaler & Retailer margins 374

wholesalers 15, 32, 44-6, 48-9, 66, 104, 123-5, 137-8, 140-1, 153-6, 174, 178-9, 183-4, 249, 374-5

Wholesalers & Retailers 2

wholesalers, existing 130, 153

wholesalers set prices 179

Wick 107-108, 111-14, 116, 118, 148

Wilson, Brian 86, 228

Winter 66, 68, 70, 72, 87-90, 92-4, 96-8

Winter Mean 68, 70, 72

Wm Morrison Supermarkets PLC 117, 119

Wolmar, Christian 383

Wolter 255

Wood Mackenzie 222, 388

work 47, 65, 123, 128, 133, 149, 152, 154, 172, 180, 182, 203, 211, 213, 216

World in Action 86

Wyatt, D. 171-2, 385

X

Y

Yes/No 377-8

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Motor fuel markets prices & taxes

Economy & Finance

Transcript of Motor fuel markets prices & taxes