Motor fuel markets prices & taxes
-
Upload
derek-louden -
Category
Economy & Finance
-
view
123 -
download
9
Transcript of Motor fuel markets prices & taxes
0
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
1
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
2
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.
3
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;
4
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.
5
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.
6
7
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).
8
9
10
11
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
12
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.
13
14
15
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.
16
17
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.
18
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)
19
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
20
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
21
fig (2.7m/4)
22
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.
23
24
25
A variety of graphs are used to show the change in the structure of the market in recent
26
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.
27
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
28
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
29
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
30
32
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
33
34
35
36
37
38
40
33.5%
66.5%
Company Independent
Source : Adapted from MMC, (1990), The Supply of Petrol
fig (2.19)
UK Retail Site Ownership1988 Market Share
41
41.2%
58.8%
Company Independent
Source : Adapted from Petroleum Review, (1996), UK Retail Marketing Survey
fig (1.20)
UK Retail Site Ownership1995 Market Share
42
43.8%
56.2%
Company Independent
Source : Adapted from Petroleum Review, (2000), UK Retail Marketing Survey
fig (2.20a)
UK Retail Site Ownership1999 Market Share
43
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.
44
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.
45
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,").
46
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
48
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
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,
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)
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.
60
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.
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
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)
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
74
Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland
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
Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland
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
Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland
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,
77
Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland
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,
78
Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland
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,
79
Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland
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,
80
Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland
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,
81
Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland
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,
82
Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland
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,
83
Source: Adapted from (1) PHH (1996) “All-star Price Survey” and (2) Mackay Consultants (2000) “Rural
Scotland Price Survey”
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
Source: Adapted from (1) PHH (1996) “All-star Price Survey” and (2) Mackay Consultants (2000) “Rural
Scotland Price Survey”
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
Source: Adapted from (1) PHH (1996) “All-star Price Survey” and (2) Mackay Consultants (2000) “Rural
Scotland Price Survey”
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
Net Price Duty VAT Period Gross 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
Net Price Duty VAT Period Gross 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)
(2) http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx Monthly Table QEP 4.1.1
93
Unleaded Petrol - Net Highlands Price
Net Price Duty VAT Period Gross 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
UK Highlands Price Difference Price Difference
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
Source: Adapted from (1) PHH (1996) “All-star Price Survey”, (2) Mackay Consultants (2000) “Rural Scotland
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,
95
96
Diesel - Net UK Price
Net Price Duty VAT Period Gross 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
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
97
Diesel - Net Highlands Price
Net Price Duty VAT Period Gross 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
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
98
UK versus Highlands Diesel Price Net of Duty & VAT
UK Highlands Price Difference Price Difference
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
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
99
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
106
107
108
109
110
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
115
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¤cy=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
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:
132
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
133
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
134
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
136
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.
152
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
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
Source:http://www2.creditsafeuk.com/?id=3006
Table 4.10
162
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
Source:http://www2.creditsafeuk.com/?id=3006
Table 4.11
164
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.”
(Royal Commission, op cit, Chapter 7, Page 109)
“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,”
(Royal Commission, op cit, Chapter 2, Page 17)
187
Source: http://uk-air.defra.gov.uk/reports/cat07/1209130947_DA_AQPI_2010_MainBody_v1.pdf
fig (6.1)
188
Source: http://uk-air.defra.gov.uk/reports/cat07/1209130947_DA_AQPI_2010_MainBody_v1.pdf
fig (6.2)
189
Source: http://uk-air.defra.gov.uk/reports/cat07/1209130947_DA_AQPI_2010_MainBody_v1.pdf
fig (6.3)
190
Source: http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-224124
fig (6.4)
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
Production Processes
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
Source: Adapted from Social Trends (Table 13.7, Page 200)
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
R o a d T ra n sp ort
O th e r T ra n sp ort
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
Source: Adapted from Social Trends (Table 13.2, Page 198)
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
R o a d T ra n sp ort
O th e r T ra n sp ort
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
Production Processes
Road Transport
Other Transport
Waste Treatment
Other Sources
Source: Adapted from Social Trends (Table 13.4, Page 199)
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.”
(Royal Commission, op cit, Chapter 3, Page 35)
“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.”
(Royal Commission, op cit, Chapter 3, Page 37)
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 98/69/EC Euro 3 emission limits for cars
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 2002/80/EC Euro 4 emission limits for cars
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
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,
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
http://www.nationalarchives.gov.uk/doc/open-government-licence/version/2/
Fig 6.13 Source: Diagrams from
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
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.
218
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
220
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)
Be
lgu
im
De
nm
ark
Ge
rm
an
y
Gre
ec
e
Sp
ain
Fra
nc
e
Ire
lan
d
Ita
ly
Lu
xe
mb
ou
rg
Ho
lla
nd
Au
stri
a
Po
rtu
ga
l
Fin
lan
d
Sw
ed
en
UK
Mem ber State
0
100
200
300
400
500
600
700
Ca
rs
pe
r 1
00
0 In
ha
bita
nts
197019972011
Sou rc e : 1 9 70 & 1 9 97 Eu ro pe a n En v iro nm e n t Ag en c y( 20 0 0) Are we m ov in g in t he r ig ht d ire c tio n , Pa ge 6 3
20 1 1 w3 .u n ec e .o rg /p xwe b/ Dia lo g /Sav e sh o w. as p ?l an g =1
E u ro p e a n U n io nCars per 1000 Inhabitants
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.
64 76 106
112
130
139
171
213
218
223
231
257
590
802
1392
Sw
ed
en
De
nm
ark
Fra
nc
e
UK
Be
lgu
im
Ho
lla
nd
Ge
rm
an
y
Lu
xe
mb
ou
rg
Ire
lan
d
Ita
ly
Au
stri
a
Fin
lan
d
Sp
ain
Po
rtu
ga
l
Gre
ec
e
Mem ber State
0
500
1000
1500
%a
ge
In
cre
ase
Ca
rs
pe
r H
ou
seh
old
Sourc e : 1 9 70 - Ada pte d from Europe an Envi ronme nt Agenc y( 20 0 0) "Are we movi ng i n the righ t d irec ti on?" Pa ge 6 3
20 1 1 - Adapte d from w3 .unec e. org/ px web /Dia log /Sav e show. as p?l ang=1
E u ro p e a n U n io n% age Increase in Cars per Household
1970- 2011
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
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.
1505
2145
2714 2821 28803160
3280 3284
39634138
4583 4595
55055665
7287
Gr eece
Luxembour g
Finland
Denm ar k
Italy
Austria
Sweden
Belguim
Holland
Portugal
Ir eland
Spain
France
Germ any
UK
Member State
0
1000
2000
3000
4000
5000
6000
7000
8000
Pe
op
le p
er
Fill
ing
Sta
tion
Sou rc e : Ad ap te d fr om (1 ) Ne w In te rn at io na li st (1 99 9 ) T h e Wor ld Gui de , an d
(2 ) Pe tr ol eu m Re vi ew ( 20 0 0) "UK Ret ai l M a rk et in g Su rv e y" Pag e 2 7
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)
236
24
0
1,0
42
1,9
40
1,9
70
2,6
02
2,6
10
2,7
80
3,1
80
4,2
40 7,1
60
8,7
00
10
,30
9
11
,98
0
14
,32
5
21
,35
0
Lu
xe
mb
ou
rg
Ire
lan
d
Fin
lan
d
De
nm
ark
Au
str
ia
Po
rtu
ga
l
Sw
ed
en
Be
lgu
im
Ho
lla
nd
Gre
ec
e
UK
Sp
ain
Fra
nc
e
Ge
rma
ny
Ita
ly
Member State
0
5,000
10,000
15,000
20,000
25,000
Nu
mb
er o
f F
illi
ng
Sta
tio
ns
Sour c e: Adapted fr om EURO PIA Annual Repor t 2011 Page 111
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#
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.
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
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
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
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
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
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
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).
http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&numdoc=31992L0081&model=guichett&lg=en
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
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
not to be exceeded >
35 times pa)
40ug/m3
(annual
mean)
31 Dec 2004
31 Dec 2004
Sulphur Dioxide Power Generation &
Industry
350ug/m3 (1hr mean
not to be exceeded >
24 times pa)
125ug/m3 (24hr mean
not to be exceeded >
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
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
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
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
http://ec.europa.eu/taxation_customs/index_en.htm#
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:
272
Engine Size Annual Circulation Tax (Euros)
Up to 50 cc Nil
From 51 cc to 300 cc 22 Euros
From 301 cc to 785 cc 55 Euros
From 786 cc to 1071 cc 120 Euros
From 1071 cc to 1357 cc 135 Euros
From 1358 cc to 1548 cc 240 Euros
From 1549 cc to 1738 cc 265 Euros
From 1739 cc to 1928 cc 300 Euros
From 1929 cc to 2357 cc 660 Euros
From 2358 cc to 3000 cc 880 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
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
Euro super 95 (Unleaded Petrol) 41.441 55.400
Automotive Gas Oil (Diesel) 39.860 39.700
Liquefied Petroleum Gas (LPG) 13.900 26.100
Table 7.8 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
http://ec.europa.eu/taxation_customs/index_en.htm#
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_2013
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:
Motor Fuel Tax Per Litre/kg
(Euro Cents) 2000
Tax Per Litre/kg
(Euro Cents) 2013
Euro super 95 (Unleaded Petrol) 50.719 61.357
Automotive Gas Oil (Diesel) 29.004 42.769
LPG (Exempt) - -
Table 7.10 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
http://ec.europa.eu/taxation_customs/index_en.htm#
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_2013
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:
Motor Fuel Tax Per Litre/kg
(Euro Cents) 2000
Tax Per Litre/kg
(Euro Cents) 2013
Euro super 95 (Unleaded Petrol) 51.851 59.259
Automotive Gas Oil (Diesel) 34.433 44.357
Liquefied Petroleum Gas (LPG) 23.715 49.763
Table 7.11 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
http://ec.europa.eu/taxation_customs/index_en.htm#
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_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
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_2013
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:
Motor Fuel Tax Per Litre/kg
(Euro Cents) 2000
Tax Per Litre/kg
(Euro Cents) 2013
Euro super 95 (Unleaded Petrol) 55.970 65.040
Automotive Gas Oil (Diesel) 30.467 46.950
Liquefied Petroleum Gas (LPG) 0
Table 7.12 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
http://ec.europa.eu/taxation_customs/index_en.htm#
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_2013
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:
Motor Fuel Tax Per Litre/kg
(Euro Cents) 2000
Tax Per Litre/kg
(Euro Cents) 2013
Euro super 95 (Unleaded Petrol) 58.928 60.690
Lead Substitute Petrol (LRP) 63.968 63.960
Automotive Gas Oil (Diesel) 39.195 42.840
Liquefied Petroleum Gas (LPG) 5.991 10.760
Table 7.13 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
http://ec.europa.eu/taxation_customs/index_en.htm#
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_2013
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:
Motor Fuel Tax Per Litre/kg
(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
Liquefied Petroleum Gas (LPG) 18.032 13.830
Table 7.14 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
http://ec.europa.eu/taxation_customs/taxation/excise_duties/energy_products/rates/index_en.htm
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_2013
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
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.
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:
Motor Fuel Tax Per Litre/kg
(Euro Cents) 2000
Tax Per Litre/kg
(Euro Cents) 2013
Euro super 95 (Unleaded Petrol) 37.870 58.771
Lead Substitute Petrol (LRP) 46.359 58.771
Automotive Gas Oil (Diesel) 33.007 47.902
Liquefied Petroleum Gas (LPG) 7.206 17.636
Table 7.15 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
http://ec.europa.eu/taxation_customs/index_en.htm#
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_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:
Motor Fuel Tax Per Litre/kg
(Euro Cents) 2000
Tax Per Litre/kg
(Euro Cents) 2013
Euro super 95 (Unleaded Petrol) 52.032 72.840
Lead Substitute Petrol (LRP) 55.672 72.840
Automotive Gas Oil (Diesel) 38.169 61.740
Liquefied Petroleum Gas (LPG) 14.479 26.777
Table 7.16 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
http://ec.europa.eu/taxation_customs/index_en.htm#
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_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:
Motor Fuel Tax Per Litre/kg
(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
Lead Substitute Petrol (LRP) 37.209 51.666
AutoGas Oil (Diesel) <=10mg/kg 25.285 33.500
AutoGas Oil (Diesel) >10mg/kg 25.285 33.83548
Liquefied Petroleum Gas (LPG) 5.454 10.164
Table 7.17 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
http://ec.europa.eu/taxation_customs/index_en.htm#
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_2013
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.
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%
Source: Adapted from European Env ironment Agency http://warehouse.eea.eu.int/c gi-bin/brok er.exe
LuxembourgNitrogen Oxide Emissions by Sector
1998
339
fig (7.111)
Energy0.9%
Industry49.9%
Transport16.0%
Waste2.1%
Other31.2%
Source: Adapted from European Env ironment Agency http://warehouse.eea.eu.int/c gi-bin/brok er.exe
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%
Source: Adapted from European Env ironment Agency http://warehouse.eea.eu.int/c gi-bin/brok er.exe
LuxembourgNMVOC Emissions by Sector
1998
fig (7.114)
341
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:
Motor Fuel Tax Per Litre/kg
(Euro Cents) 2000
Tax Per Litre/kg
(Euro Cents) 2013
Euro super 95 (Unleaded Petrol) 59.677 74.655
Lead Substitute Petrol (LRP) 59.677 83.138
AutoGas Oil (Diesel) <=10mg/kg 35.182 44.028
AutoGas Oil (Diesel) >10mg/kg 35.182 45.144
Liquefied Petroleum Gas (LPG) 6.389 18.004
Table 7.18 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
http://ec.europa.eu/taxation_customs/index_en.htm#
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_2013
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:
Motor Fuel Tax Per Litre/kg
(Euro Cents) 2000
Tax Per Litre/kg
(Euro Cents) 2013
Euro super 95 (Unleaded Petrol) 28.930 58.527
Lead Substitute Petrol (LRP) 28.930 71.632
AutoGas Oil (Diesel) 24.591 36.753
Liquefied Petroleum Gas (LPG) 5.088 12.788
Table 7.19 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
http://ec.europa.eu/taxation_customs/index_en.htm#
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_2013
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:
Motor Fuel Tax Per Litre/kg
(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
Lead Substitute Petrol (LRP) 40.479 45.779
AutoGas Oil (Diesel) >10mg/kg 26.986 33.100
Liquefied Petroleum Gas (LPG) 3.239 5.747
Table 7.20 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
http://ec.europa.eu/taxation_customs/index_en.htm#
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_2013
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
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:
Motor Fuel Tax Per Litre/kg
(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
AutoGas Oil (Diesel) – Class 2 34.596 60.474
AutoGas Oil (Diesel) – Class 3 34.596 62.138
Liquefied Petroleum Gas (LPG) 16.694 18.200
Table 7.21 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
http://ec.europa.eu/taxation_customs/index_en.htm#
For a fuller analysis see: ACEA Tax Guide 2013 http://www.acea.be/news/news_detail/acea_tax_guide_2013
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
down from 80.5% in 1997.
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,
down from 77.7% in 1997.
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
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
Bibliography Chapter 2
MMC (1990) The Supply of Petrol, London, HMSO
Department of Transport (1993) Transport Statistics of Great Britain, London, HMSO
Department of Transport (1997) Transport Statistics of Great Britain, London, HMSO
Department of Transport (2009) Transport Statistics of Great Britain, London, HMSO
Department of Transport (1997) Vehicle Licensing Statistics, London, HMSO
Department of Transport (1999) Vehicle Licensing Statistics, London, HMSO
Department of Transport (2003) Vehicle Licensing Statistics, London, HMSO
Department of Transport (2010) Vehicle Licensing Statistics 2009, London, HMSO
Central Statistical Office (1995) Social Trends 25, London, HMSO
Department of Transport (1998) Vehicle Licensing Statistics 1997, London, DETR
Department of Transport http://www.dft.gov.uk/statistics/series/vehicle-licensing Table VEH0102
Department of Transport http://www.dft.gov.uk/statistics/releases/tsgb-2011-modal-comparisons
Royal Commission on Environmental Pollution (1994) Transport and the Environment, London, HMSO
EKOS Ltd. (2000) Economic Impacts of Road Fuel Prices in the Highlands and Islands, Inverness, EKOS
Energy Institute (2012) UK Retail Marketing Survey, London, Energy Institute
Energy Institute (2011) UK Retail Marketing Survey, London, Energy Institute
Energy Institute (2010) UK Retail Marketing Survey, London, Energy Institute
Energy Institute (2009) UK Retail Marketing Survey, London, Energy Institute
Energy Institute (2008) UK Retail Marketing Survey, London, Energy Institute
Energy Institute (2007) UK Retail Marketing Survey, London, Energy Institute
Energy Institute (2006) UK Retail Marketing Survey, London, Energy Institute
Energy Institute (2005) UK Retail Marketing Survey, London, Energy Institute
Energy Institute (2004) UK Retail Marketing Survey, London, Energy Institute
Institute of Petroleum (2003) UK Retail Marketing Survey, London, Institute of Petroleum
Institute of Petroleum (2002) UK Retail Marketing Survey, London, Institute of Petroleum
Institute of Petroleum (2001) UK Retail Marketing Survey, London, Institute of Petroleum
Institute of Petroleum (2000) UK Retail Marketing Survey, London, Institute of Petroleum
Institute of Petroleum (1999) UK Retail Marketing Survey, London, Institute of Petroleum
382
Institute of Petroleum (1998) UK Retail Marketing Survey, London, Institute of Petroleum
Institute of Petroleum (1997) UK Retail Marketing Survey, London, Institute of Petroleum
Institute of Petroleum (1996) UK Retail Marketing Survey, London, Institute of Petroleum
Oil & Energy Trends (1995) Annual Statistical Review, Oxford, Blackwell
BP (Various Years) Statistical Review of World Energy, London, BP
ENI (2011) World Oil & Gas Review, Milan, ENI
Department of Energy & Climate Change (2011) Energy Trends, London, DECC
DECC http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx
Monopolies and Mergers Commission (1990) The Supply of Petrol, London, HMSO
Department of Trade & Industry (2000) Petrol and Derv Prices, London, DTI, (Deirdre Taylor)
Caffarra, C. (1994) Vertical Contracts in Petrol Retailing, Oxford, Oxford Institute for Energy Studies
Petrol Retailers Association Membership Service Guide, Rugby, Petrol Retailers Association
House of Commons Trade & Industry Committee (1996) Sixth Report: Petrol Retailing, London, HMSO
News of the World (15/10/95) Tanks a bundle Esso, London, News International
Institute of Petroleum (Feb 2000) Petroleum Review, London, Institute of Petroleum
Petrol Retailers Association (Feb 1996) Forecourt, Rugby, Petrol Retailers Association
UKPIA http://www.ukpia.com/home.aspx
Office of Fair Trading (May 1998) Competition in the supply of petrol in the UK, London, OFT
Office of Fair Trading (Sept 1999) The Competition Act 1998, Assessment of Individual Agreements and
Conduct, London, OFT
Office of Fair Trading (2011) Price and Choice in Rural Communities – Call for Evidence, London, OFT (OFT
1420) http://www.oft.gov.uk/shared_oft/consultations/remote-communities/OFT1420.pdf
Office of Fair Trading (2012) Petrol & Diesel Pricing in the Scottish Islands, London, OFT (OFT1432)
http://www.oft.gov.uk/shared_oft/markets-work/OFT1432.pdf
Office of Fair Trading (2013) UK Petrol & Diesel Sector an OFT Call for Information, London, OFT
(OFT1475) http://www.oft.gov.uk/shared_oft/markets-work/OFT1475.pdf
Chapter 3
European Commission (1993) Single Programming Document, Brussels, European Commission
Highlands & Islands Partnership Programme (2006) Highlands & Islands Scotland ERDF Programme, 2007-
2013, Inverness, Highlands & Islands Partnership Programme
383
Highlands & Islands Partnership Programme (1999) Highlands & Islands Special Programme, Plan 2000-2006,
Inverness, Highlands & Islands Partnership Programme
Highlands and Islands Enterprise (2011) Area Profiles, Inverness, HIE
Farrington, John et al (1998) Car Dependence in Rural Scotland, Edinburgh, Scottish Office Central Research
Unit
The Stationery Office (1999) Social Trends, London, TSO
Louden, Derek (1996) The Supply of Petrol in the United Kingdom and the Urban/Rural Price Dichotomy,
(unpublished dissertation for the degree of MA in Energy Studies) Sheffield, University of Sheffield
Louden, Derek (1999) Fuel Prices in the Highlands and Islands, report by Highlands and Islands Action Group
on Hydrocarbon Fuel Prices to the OFT, Inverness, HIAG
Louden, Derek (2001) Motor Fuel Markets Prices and Taxes Annual Review 2001, Uppermill, HyperActiv
Group
EKOS Ltd. (2000) Economic Impacts of Road Fuel Prices in the Highlands and Islands, Inverness, EKOS Ltd.
Scottish Executive (1999) Scottish Transport Statistics, Edinburgh, TSO
Transport Scotland (2011) Scottish Transport Statistics, Edinburgh, National Statistics
National Statistics (2011) Transport Statistics of Northern Ireland, Belfast, National Statistics
DECC http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx
DFT Vehicle Licensing Statistics http://www.dft.gov.uk/statistics/series/vehicle-licensing
DFT Traffic http://www.dft.gov.uk/statistics/series/traffic Table TRA0203
Institute of Petroleum (2000) Retail Marketing Survey, London, Institute of Petroleum
Office of Fair Trading (1998) Competition in the Supply of Petrol in the UK, London, OFT
Highland Council (various dates) Information on filling station numbers & tank ages, Inverness, Highland
Council
UK Independents’ Market Share - http://79.170.40.172/rmif.co.uk/index.php?op=page&id=35
Scottish Parliament (31/1/00) Official Report, Enterprise and Lifelong Learning Committee, Cols 457 & 458,
Edinburgh, Scottish Parliament
Halcrow Fox (1996) Economic and Social Impact Assessment: Petroleum Prices and Distribution in the
Highlands and Islands, Edinburgh, Halcrow Fox
National Economic Research Associates (1992) Market Definition in UK Competition Policy, London, OFT
Monopolies and Mergers Commission (1990) The Supply of Petrol, London, HMSO
Mackay Consultants (various dates) Rural Scotland Price Survey, Inverness, Mackay Consultants
Office of Fair Trading (July 2000) Petrol and Diesel Pricing in the Highlands & Islands, London, OFT
PHH Vehicle Management Services (various dates) All-star Price Survey, Swindon, PHH
Wolmar, Christian (1998) Stagecoach, London, Orion
384
Highland Council (2011) PED Committee Report PED22/11, Inverness, Highland Council
Highland Council (2013) FOI Request re Filling Stations open & closed since 1993.
Press & Journal (29/02/12) Ups and Downs of Pump Prices, Aberdeen, Aberdeen Journals
Chapter 4
Monopolies and Mergers Commission (1990) The Supply of Petrol, London, HMSO
Scottish Parliament (31/1/00) Official Report, Enterprise and Lifelong Learning Committee, Col 491,
Edinburgh, Scottish Parliament
Scottish Parliament (31/1/00) Official Report, Enterprise and Lifelong Learning Committee, Col 509,
Edinburgh, Scottish Parliament
Office of Fair Trading (1998) Competition in the supply of petrol in the UK, London, OFT
Office of Fair Trading (2012) OFT 1432 Enclosure 3: Margin composition for Road Fuels
Spot Prices from: http://www.indexmundi.com/commodities/?commodity=rbob-gasoline&months=60¤cy=gbp&commodity=diesel
von Weizsacker, C.C. (1980) Barriers to Entry, a Theoretical Treatment, Berlin, Springer-Verlag
Bain, J.S. (1956) Barriers to New Competition, Cambridge, Harvard University Press
Anderton, Alain (1990) Economics, 1st Edn, Liverpool, Causeway Press Ltd
National Economic Research Associates (1992) Market Definition in UK Competition Policy, London, OFT
Office of Fair Trading (1999) The Competition Act 1998, The Major Provisions, London, OFT (OFT400)
David Maddison, Pearce, D. et al (1996) Blueprint 5, The True Costs of Road Transport, London,
CSERGE/Earthscan
EKOS Ltd. (2000) Economic Impacts of Road Fuel Prices in the Highlands and Islands, Inverness, EKOS Ltd.
Laidler, David (1981) Introduction to Microeconomics, 2nd
Edition, Oxford, Philip Allan
Highland Council (March 2000) Lobbying Brief - The Campaign for Fair Fuel Prices, Inverness, Highland
Council
http://www.phh.co.uk/
http://www.catalist.com/Products%20and%20Services/Fuel%20price%20data.aspx
Driffield, Nigel (22/9/97) Letter commenting on D W Louden dissertation, Cardiff, Cardiff Business School
Louden, Derek (1999) Fuel Prices in the Highlands and Islands, Inverness, HIAG
Richard-Jones, David (1999) Fuel Price Anomalies in Caithness, Caithness, Highland Council
Campbell, Jonathan (1999) Report on Fuel Prices in Orkney, Kirkwall, Orkney Islands Council
MacCorquodale, Ken and Alison Magee (1999) Fuel Prices in the Inner Moray Firth Area, Inverness, Highland
Council
385
Cole-Hamilton, Simon (1999) Letter to DGFT on fuel prices in the Highlands, Inverness, Inverness & District
Chamber of Commerce
Commercial Solvents v Commission [1974] ECR 223, [1974] 1 CMLR 309
Companies House (Various) Annual Report & Accounts
http://www2.creditsafeuk.com/
Chapter 5
Scottish Parliament (31/1/00) Official Report, Enterprise and Lifelong Learning Committee, Cols 473 & 474,
Edinburgh, Scottish Parliament
Carsberg, Bryan (24/2/95) Need for unitary competition authority, London, Financial Times
Competition Act (1998) London, The Stationery Office
Van Miert, Karel (19/10/95) Letter on rural petrol pricing, Brussels, European Commission
Fair Trading Act (1973) London, HMSO
Competition Act (1980) London, HMSO
MacPherson, Duncan J. (7/4/94) Letter to M. Heseltine, Inverness, Highland Regional Council
Hamilton, Neil (10/5/94) Letter to Duncan MacPherson rejecting OFT Investigation, London, DTI
Hamilton, Neil (Aug 1994) Letter to Ray Michie re S13(1) Competition Act 1980, London, DTI
Evans, Jonathan (20/9/95) Letter to Winnie Ewing re Highland Petrol Prices, London, DTI
Cole, John (1995) As it seemed to me, London, Weidenfeld & Nicholson
European Economic Community (1957) Treaty of Rome, Rome, EEC
European Union (1999) Treaty of Amsterdam, Brussels, EU
Rudden , B and Wyatt, D (1992) Basic Community Laws, 3rd Edn, Oxford, Clarendon Press
European Commission (1983) Regulation 1984/83, Brussels, European Commission
Monopolies Commission (1965) The Supply of Petrol to Retailers in the United Kingdom, London, HMSO
House of Commons Trade & Industry Committee (1978) Second Report, Session 1977-78: Petrol Retailing,
London, HMSO
Monopolies and Mergers Commission (1979) The Supply of Petrol in the United Kingdom by Wholesale,
London, HMSO
Monopolies and Mergers Commission (1990) The Supply of Petrol in the United Kingdom by Wholesale,
London, HMSO
House of Commons Trade & Industry Committee (1996) Sixth Report, Session 1995-96: Petrol Retailing,
London, HMSO
Halcrow Fox (1996) Economic and Social Impact Assessment: Petroleum Prices and Distribution in the
Highlands and Islands, Edinburgh, Halcrow Fox
386
Environmental Resources Management and Sidaway, R. (1998) Petrol Stations in Rural Scotland, Edinburgh,
Scottish Office Central Research Unit
Farrington, John et al (1998) Car Dependence in Rural Scotland, Edinburgh, Scottish Office Central Research
Unit
Office of Fair Trading (2011) Price and Choice in Rural Communities – Call for Evidence, London, OFT (OFT
1420) http://www.oft.gov.uk/shared_oft/consultations/remote-communities/OFT1420.pdf
Office of Fair Trading (2012) Petrol & Diesel Pricing in the Scottish Islands, London, OFT (OFT1432)
http://www.oft.gov.uk/shared_oft/markets-work/OFT1432.pdf
Office of Fair Trading (2013) UK Petrol & Diesel Sector an OFT Call for Information, London, OFT
(OFT1475) http://www.oft.gov.uk/shared_oft/markets-work/OFT1475.pdf
Chapter 6
Royal Commission on Environmental Pollution (1994) Eighteenth Report, Transport and the Environment,
London, HMSO
Central Statistical Office (1999) Social Trends, London, TSO
http://www.environment.detr.gov.uk/des20/pocket/
http://unfccc.int/national_reports/annex_i_ghg_inventories/national_inventories_submissions/items/6598.php
http://uk-air.defra.gov.uk/reports/cat07/1209130947_DA_AQPI_2010_MainBody_v1.pdf
http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-224124
European Commission (1994) Directive 94/63/EC on the Recovery of Volatile Organic Compounds, Brussels,
European Commission
Miller, Harry (1995) Supply of Petrol and Other Hydrocarbons to the Western Isles, Lewis, CNE-Siar
http://www.defra.gov.uk/statistics/environmental/air-quality/
Environmental Resources Management and Sidaway, R. (1998) Petrol Stations in Rural Scotland, Edinburgh,
Scottish Office Central Research Unit
Statutory Instrument 1996 No 2678 (1996) Environmental Protection (Prescribed Processes and Substances
etc) (Amendment) (Petrol Vapour Recovery) Regulations 1996, London, HMSO
Petter, CKB, (1995) The Future of Rural Filling Stations, Rugby, Petrol Retailers Association
European Commission (1970) Directive 70/220/EEC Directive relating to measures to be taken against air
pollution by gases from positive ignition engines of motor vehicles, Brussels, European Commission.
European Commission (1977) 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), Brussels,
European Commission
European Commission (1980) Directive 80/779/EEC Directive on air quality limit values and guide values for
sulphur dioxide and suspended particulates, Brussels, European Commission
European Commission (1982) Directive 82/884/EEC Directive on a limit value for the lead in air, Brussels,
European Commission
387
European Commission (1985) Directive 85/203/EEC Directive on air quality standards for nitrogen oxide,
Brussels, European Commission
European Commission (1988) Directive 88/77/EEC Directive on emission of gaseous pollutants from diesel
lorries and buses, Brussels, European Commission
European Commission (1991) Directive 91/41/EEC Directive setting Euro 1 emission limits for cars, Brussels,
European Commission
European Commission (1992) Directive 92/72/EEC Directive on air pollution by ozone, Brussels, European
Commission
European Commission (1993) Directive 93/12/EEC Directive relating to the sulphur content of certain liquid
fuels, Brussels, European Commission
European Commission (1994) Directive 94/12/EC Directive setting Euro 2 emission limits for cars, Brussels,
European Commission
European Commission (1994) Directive 94/83/EC Directive on the control of volatile organic compounds,
Brussels, European Commission
European Commission (1998) Directive 98/69/EC Directive setting Euro 3 emission limits for cars, Brussels,
European Commission
European Commission (1998) Directive 98/70/EC Directive phasing out leaded petrol & reducing the sulphur
and benzene content in petrol, Brussels, European Commission
European Commission (1999) Directive 1999/32/EC Directive reducing sulphur content of liquid fuels,
Brussels, European Commission
European Commission (2002) Directive 2002/80/EC Directive setting Euro4 emission limits for cars, Brussels,
European Commission
European Commission (2003) Directive 2003/30/EC Directive on the promotion and use of biofuels or other
renewable fuels for transport, Brussels, European Commission
Regulation (EC) No 715/2007 Regulation on type approval of motor vehicles with respect to emissions Euro 5
and Euro 6 limits for cars, Brussels, European Commission
European Commission (2008) Directive 2008/50/EC Directive on ambient air quality and cleaner air for
Europe, Brussels, European Commission
European Commission (2009) 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, Brussels,
European Commission
European Commission (2009) 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 , Brussels, European Commission
European Commission (2009) Directive 2009/126/EC Directive on Stage II petrol vapour recovery during
refuelling of motor vehicles at service stations, Brussels, European Commission
European Commission (2012) Directive 2012/33/EU Amending Council Directive 1999/32/EC as regards the
sulphur content of marine fuels, Brussels, European Commission
388
House of Commons Trade & Industry Committee (1996) Sixth Report, Session 1995-96: Petrol Retailing,
London, HMSO
Halcrow Fox (1996) Economic and Social Impact Assessment: Petroleum Prices and Distribution in the
Highlands and Islands, Edinburgh, Halcrow Fox
Scottish Executive (1999) Rural Petrol Stations Scheme, Edinburgh, Scottish Executive (B8594-8-99)
Review Group on Acid Rain (1997) Fourth Report, Acid Deposition in the United Kingdom, Culham, AEA
Technology plc
David Maddison, Pearce, D. et al (1996) Blueprint 5, The True Costs of Road Transport, London,
CSERGE/Earthscan
Newbery, David (1992) Economic Principles Relevant to Pricing Roads, Oxford, Oxford Review of Economic
Policy
Laura Blow & Crawford, Ian (1997) The Distributional Effects of Taxes on Private Motoring, London, Institute
for Fiscal Studies
John Farrington, Collins, B., Coole, N., (1996) Sustainable Transport Policy and People Living in Rural Areas,
Scottish Consumer Council
Mumford, Peter (2000) The Road From Inequity: Fairer ways of paying the true costs of road use, London,
Adam Smith Institute
http://www,bbc.co.uk/news/uk-england-london-21451245
Royal Commission on Environmental Pollution (2000) Twenty-second Report, Energy - The Changing Climate,
Norwich, The Stationery Office
John Farrington, Collins, B., & Coole, N., (1996a) Cars and the Environment a Policy Paper, Scottish
Consumer Council
Schabas, Michael (1995) Charging for Roads: A better way to ease congestion, London, Centre for Policy
Studies
Hibbs, John (1998) Editorial: a radical approach, Economic Affairs, Vol 18, No 4, London, Blackwell/IEA
Day, Alan (1998) The case for road pricing, Economic Affairs, Vol 18, No 4, London, Blackwell/IEA
Ison, Stephen (1998) The saleability of urban road pricing, Economic Affairs, Vol 18, No 4, London,
Blackwell/IEA
Bayliss, David (1998) Road Pricing and the new deal for transport, Economic Affairs, Vol 18, No 4, London,
Blackwell/IEA
http://eur-lex.europa.eu/en/index.htm
http://www.en.wikipedia.org/wiki/European_emission_standards
DEFRA (2011) UK Emissions Map of SO2 London, DEFRA
DEFRA (2011) UK Emissions Map of NOx, London, DEFRA
http://www.transportscotland.gov.uk/strategy-and-research/publications-and-consultations/j210731-08.htm#
http://www.bbc.co.uk/news/uk-england-london-21451245
389
Wood Mackenzie (2009) UK Downstream Oil Infrastructure, Edinburgh, Wood Mackenzie
Deloitte (2012) Study of the UK Petroleum Retail Market, London, Deloitte
Chapter 7
European Commission (Various Dates) Bulletin Petrolier Brussels, European Commission
Scottish Parliament (31/1/00) Official Report, Enterprise and Lifelong Learning Committee, Col 487,
Edinburgh, Scottish Parliament
European Commission (Various Dates) Bulletin Petrolier, Brussels, Directorate-General for Energy and
Transport
BP Amoco (1999) Statistical Review of World Energy, London, BP Amoco plc
BP (2012) Statistical Review of World Energy, London, BP
Organisation for Economic Co-operation and Development (1999) OECD in Figures, Paris, OECD
European Environment Agency (2000) Are we moving in the right direction? Copenhagen, EEA
http://appsso.eurostat.europa.eu/nui/submitViewTableAction.do#
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, Cleveland, Ohio, International Association For Energy
Economics
Mure, Isabelle (31/7/97) Fax on Fuel Price Regime in France, Paris, Ministere de L’economie, des Finances et
de L’industrie
Scottish Parliament (2000) Research Note 00/38 European Petrol Retailing, Edinburgh, Scottish Parliament
European Council (1992) Council Directive 92/82/EC, Brussels, European Council of Ministers
European Council (1992) Council Directive 92/81/EC, Brussels, European Council of Ministers
Oliveira, Esmeralda (31/7/97) Fax on Fuel Price Regime in Portugal, Porto, Euro-Info Centre
Molander, Mans (01/08/97) Fax on Fuel Transport Subsidies in Sweden, Stockholm, Euro-Info Centre
Oesterreich, Ellen (04/08/97) Fax on Fuel Subsidies in Rural Areas, Bonn, Deutscher - Industrie - Und
Handelstag
EUROPIA (2011) Annual Report, Brussels, EUROPIA
http://ec.europa.eu/taxation_customs/index_en.htm#
http://ec.europa.eu/energy/observatory/oil/bulletin_en.htm
http://portal.wko.at/wk/
http://www.ianbyrne.free-online.co.uk/country/maps-b.htm
http://www.gps-data-team.com/poi/belgium/petrol/
http://www.petrolfed.be/fr
390
http://www.fyidenmark.com/gasstationsindenmark.html
http://www.eof.dk/Viden/Publikationer/Energinoter.aspx
http://www.oil.fi/en/statistics-4-service-stations/41-service-stations
http://www.oil.fi/en/statistics-4-service-stations/42-amount-service-stations-finland
http://ufip.fr/?rubrique=4&ss_rubrique=679#
Cool, Thomas (1996) A Graduated transport fuel excise for metropolitan areas, (see URL below)
http://netec.wustl.edu/WoPEc/data/Papers/wpawuwppe9605001.html
New Internationalist (1999) The World Guide 1999-2000, Oxford, New Internationalist Publications Ltd.
Institute of Petroleum (2000) UK Retail Marketing Survey, London, Institute of Petroleum
Highlands & Islands Enterprise (1999) Annual Report 1998-99, Inverness, HIE
UFIP (2013) Panorama Petrolier Paris, UFIP http://www.ufip.fr/
http://www.senat.fr/questions/base/2011/qSEQ11021207S.html
http://www.developpement-durable.gouv.fr/La-fiscalite-des-produits.11221.html
http://www.developpement-durable.gouv.fr/La-fiscalite-des-produits.31455.html
http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&numdoc=31992L0081&model=guichette&lg=en
http://ec.europa.eu/taxation_customs/taxation/excise_duties/energy_products/legislation/
http://www.bft.de/daten-und-fakten/245/
http://www.bft.de/daten-und-fakten/entwicklung-tankstellenanzahl/
http://www.seepe.gr/site/main2.php?lang=en&page=contentCat&contentID=30
http://pumps.ie/findStationsByBrand.php
Staffetta News (1998) published by Rivista Italiana Petrolio, Rome, Vol 1, No 11
Staffetta News (1999) published by Rivista Italiana Petrolio, Rome, Vol 2, No 1
Unione Petrolifera (2013) Databook 2013, Rome, Unione Petrolifera
http://88.37.64.110/GR.htm
The European (27/5/94-2/6/94) Free petrol will help to fuel campaign for more visitors, The European
http://www.petrol.lu/
http://www.petrol.lu/Statistiques/
House of Commons (1998/99) Northern Ireland Affairs Select Committee, Third Report, HC 334
Department of the Environment, Transport and the Regions (2000) Working Together for Clean Air, London,
DETR
391
Department of the Environment, Transport and the Regions (1998) UK Climate Change Programme,
Consultation Paper, London, DETR
http://ec.europa.eu/taxation_customs/index_en.htm#
http://www.acea.be/news/news_detail/acea_tax_guide_2013
http://europa.eu.int/comm/environment/enveco/env_database/greece2000.pdf
European Commission (July 2000) Bulletin Petrolier, Duties & Taxes, Brussels, DG Energy & Transport
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
Standard & Poor’s DRI - KULeuven (1999) Auto Oil II Cost Effectiveness Study, Part III: The Transport Base
Case, Annex B.1: Finland
http://europa.eu.int/comm/environment/enveco/env_database/france2000.pdf
Standard & Poor’s DRI - KULeuven (1999) Auto Oil II Cost Effectiveness Study, Part III: The Transport Base
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://netec.wustl.edu/WoPEc/data/Papers/wpawuwppe9605001.html
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
European Council (1992) Council Directive 92/82/EC, Brussels, European Council of Ministers
European Council (1992) Council Directive 92/81/EC, Brussels, European Council of Ministers
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
392
http://www.apetro.pt/index.php?option=com_content&task=view&id=262&Itemid=182
http://geoportal.mityc.es/hidrocarburos/
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, 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
https://addi.ehu.es/bitstream/10810/5645/1/2006.02.pdf
http://www.eapmaster.org/docs/Master_thesis_Konrad_Benze.pdf
http://spbi.se/statistik/forsaljningsstallen/
http://europa.eu.int/comm/environment/enveco/env_database/greece2000.pdf
http://unfccc.int/national_reports/annex_i_ghg_inventories/national_inventories_submissions/items/6598.php
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
[Created with TExtract / www.Texyz.com]