COMPETITION or trading standards laws could be used against garages which add a profit margin to the increases in fuel duty due next year. The report specifically investigated the issue and concluded that some retailers were planning to make gains on the back of the switch in motor tax to duty.
It said that some believed that there was an argument to increase above the duty rise, mainly to service the amount of fuel sold on account where credit terms were given to customers to keep them loyal.
The GMTA told researchers that some retailers believed they might have to add a further 1 to 1.5p on top of duty increases to fund additional inventory costs.
‘The States must give clear signals, through the local media and consumer groups, that pump price increases over and above the duty rate are both inflationary and blatant profiteering,’ said independent consultant James Milne.
‘If there were any prima facie evidence to show that concerted efforts by petrol retailers have increased pump prices by a consistent amount over and above the duty increase, then we would recommend that the States should investigate formally under the statutory powers of the Competition and Trading Standards Law and apply any sanctions retrospectively.’
Preserving the retailers’ traditional 30% margin could see pump prices rise by 17.2p per litre, adding another 4p to the margin when it has been calculated that increased overheads would be no more than 0.2ppl.
‘Why should retailers improve their margins by 4 to 6ppl at the expense of Guernsey motorists? Any increases in posted pump prices that show increases of more than even 0.5ppl following duty increases planned for January 2008 would be sheer profiteering,’ said Mr Milne.
There are concerns that maintaining profit margins would be an inflationary trigger, as businesses buying fuel would recover the increase by raising their costs.
One multi-site forecourt operator has pledged to the researchers that the duty increases would be passed on without any margin uplift.
Article posted on 16th May, 2007 - 12.00am
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