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Meetings Held With Petrol Suppliers 12 September 2005

    In response to the recent sharp increase in petrol prices the Office of Fair Trading has held urgent meetings with the two main petrol suppliers in the Island. Pump prices for a litre of unleaded petrol increased by 7 pence per litre in some places on Monday. The meetings were called partly as a result of the Office's ongoing monitoring of commercial activity in the Isle of Man and partly due to members of the public and Tynwald members contacting the Office to voice their concern at the price increases.

    What has become clear from the discussions is that the retail petrol market is a very transparent and competitive market. The commodity market price of petrol is used by the suppliers as a basis on which to price the product they supply to the retailers in the Island. Both suppliers had increased their prices at the beginning of the month and were then watching the commodity market price increase steadily throughout August. There was a widespread reluctance to increase prices as diesel had reached the price of 99.9 pence per litre and no one was willing to be the first organisation to breach the £1 per litre barrier.

    The Office has observed petrol retailers increasing their pump prices in anticipation of price increases announced by suppliers and following movements by their competitors. The Office has concerns regarding this, as this action often precedes the deliveries of petrol at the higher price. Given the readiness of certain petrol retailers to increase the price of petrol in anticipation of price changes, the Office will seek the same response when the market prices look to be decreasing.

    Vice-Chairman of the Office of Fair Trading, Mrs Brenda Cannell MHK, said: "I am pleased that the Office has received assurances from the petrol suppliers that there has been no change to their profit margins or those of retailers as a result of the price spikes caused by Hurricane Katrina. We will continue to monitor the price of petrol to ensure that retailers are responsive to downward movements in the market, as well as upward, and am pleased that we are already seeing reductions of 2 pence per litre at some filling stations."

    NOTES

    1. The proportion of fuel costs which relate to the actual product costs are very small in proportion to the total price. Examples below show where the consumer's money goes following changes in price;
    2. Petrol and diesel pumps are verified annually for accuracy by Trading Standards Inspectors. Should you have any concerns regarding the accuracy of any petrol pumps on the Island, please contact the Trading Standards Service on 686520.

     102.9 ppl 95.9 ppl
    Retailer3.153.15
    Vat15.3314.28
    Duty47.1047.10
    Wholesale product37.3231.37

    12th September 2005

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