Fuelling market forces
Saturday 27th December 2008, 10:15AM GMT.
ON WEDNESDAY, while applauding the Policy Council’s decision to buy Guernsey two lifeline fuel tankers, we also highlighted how that intervention is interference in normal commercial activities that government would ordinarily avoid.
Some have drawn parallels between the island owning its own fleet and its own airline but the two do not equate, any more than does public ownership of, say, Guernsey Electricity.
While government as principal shareholder might have a view on how those commercial undertakings operate, no other third party is involved between business and customer.
In the case of States as fleet operator, it is now supplying two private sector companies which had no commitment to maintaining continuity of supply to these islands when a crisis developed, so the terms and conditions of future deliveries to them are now of considerable interest.
Although the cost of bulk shipments here are just one element of fuel prices to the consumer, it is an important one. So whether the new company controlling Guernsey’s tankers operates on a not-for-profit basis as will Isle of Sark Shipping or to leverage its monopoly delivery position will make a significant difference to the market.
And if it takes a soft approach on making a return, who will ensure that it is the customer rather than the supply companies here who benefit from that?
Equally, it is clear that Guernsey has no need of two independent distributors. Total selling Shell products because it could not get its own demonstrates that. Higher volumes of a single brand should lead to bulk discounts for islanders and even reduced shipping costs, depending on where that product is loaded.
And one, not two, duplicated domestic supply chains, should lead to considerable efficiency gains, which could be passed onto customers.
One of the options government has as Guernsey Electricity shareholder is to forgo profit in order to generate in the most environmentally friendly way.
Will the States decide to start shipping petroleum here on similar environmental – or even ethical – criteria? Should it use its supply stranglehold to manage the market at all?
Safeguarding the vessels was absolutely correct, but that protection needs to become free of States involvement as soon as possible.
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