Enterprise and Lifelong Learning Committee, 28 Jun 2000

Meeting date: Wednesday, June 28, 2000

Official Report 137KB pdf

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Fuel Prices

We move on to the paper on fuel price issues. We expect to be joined by Rhoda Grant, from the Rural Affairs Committee, which has an interest in the matter.

We agreed to consider our progress on the fuel price inquiry. The committee began its deliberations on the issue in January, as a result of representations made to several members in different parts of Scotland. We took evidence in public session on 31 January. The committee agreed to continue the inquiry by taking further evidence from oil companies. We had a meeting with one oil company—not because the others were in any way difficult or unco-operative, but simply because trying to find a date when four members and an oil company could be in the same place was next to impossible.

Our report captures the issues that we have considered so far. In relation to paragraph 15, I should point out that we have been told that the Office of Fair Trading report will be available at the end of next week. However, that has been a fair time in the coming. Our report rehearses several suggested actions. The clerks have also circulated a letter from the policy officer of Highland Council—to which Fergus Ewing referred—which the committee received yesterday. It is open for members to decide what further action we should take on this matter. We should bear in mind the fact that we have agreed a work programme for the inquiry into the new economy, which stretches over the next few months.

Given that the long-awaited OFT report is apparently going to be published in the next few days, we should decide our future direction after we have reflected on its content. I know that Mr McCorquodale is anxious to encourage us to proceed, even without reading the OFT report, but I found some of his suggestions rather unusual. The idea that the committee might sit down with a list of all rural petrol stations, define a reasonable access distance and identify which should be regarded as essential services does not seem appropriate—those are not the duties of the committee. That was a rather strange suggestion.

The role of the committee should be to recognise that many measures should be investigated by the Scottish Parliament and by Westminster—some even have a European element. I am sure that all committee members would agree that higher petrol prices in the Highlands and Islands are a matter of great concern to everyone in the area and to people in other parts of rural Scotland. This is not a Highlands and Islands issue exclusively.

Although the committee cannot implement a solution, we should recognise that there is much more work to be done and we might make some suggestions. If that general approach is agreeable to the committee, we need not be prescriptive in our report, but we could suggest some areas where work could be carried out fruitfully. That could be done today because, whatever the OFT report says, it will not result in any action until next April at the earliest. Even if the report finds that there has been unfair trading, the matter would have to be referred to the Competition Commission.

If the committee agreed to that general approach, we could consider the many issues that have arisen from the inquiry. For example, the Scottish Parliament information centre paper on fuel prices raises some extremely interesting matters that politicians of all parties and all Parliaments have a positive duty to investigate further.

We have agreed our work programme and must consider your suggestion in that context, Fergus.

The word "specific" is worthy of further consideration. The paper did not emphasise enough the fact that our inquiry was into differential fuel prices—particularly in relation to rural Scotland and the islands—not fuel prices in general. The gap in our evidence-taking process is a further meeting with the Petrol Retailers Association, which we spoke to in January. Given that we have met the oil companies, we should meet that body in the wake of the Office of Fair Trading report, which will inform our deliberations.

I wanted to suggest areas in which further work needed to be done. I can refer to them briefly if you like, convener.

We have to address where the inquiry fits into what we are doing in general. We have agreed a work programme that sets out the areas that we will cover over the coming months. We could ask members of the committee to do research into areas that relate to differential petrol pricing and report back to the committee. Before we decide what issues to investigate, we have to decide what mechanism we will use. I cannot see how we will be able to take much more evidence on the matter formally.

I take it that we can agree to wait for the OFT report. Bearing in mind the points that have been made about the time scale and duplication of work, could we ask the Executive what work it has done on the issue and whether there is an intention to undertake further work? That would allow us to make better use of our time.

I agree that we should do that; the clerks have suggested it as well. However, I want briefly to list areas that we should specifically ask the Executive about.

Is there a derogation to allow variable duty for parts of the Highlands and Islands, as there appears to be in Greece and Portugal? Is there the power to designate certain rural petrol stations as essential services, as Highland Council has called for? Is there the power to appoint a regulator? If so, would that regulator have the power to impose a price ceiling, which—as the SPICe note says—was used in all parts of Greece apart from Salonica and Athens in 1996, when a price was imposed on the oil companies by EU rules? If such mechanisms can be used in Greece, Portugal, France, Germany and the Netherlands, surely we can use them to protect motorists in the Highlands and the people who operate rural petrol stations. Politicians of all parties have a duty to deal with the problems that are faced by rural areas. An extra price has been paid by motorists and retailers for decades.

Allan Wilson, do you have any comments?

My comments on the derogations that have been given to Portugal and Greece as part of their accession to the EU are a matter of record, as are the difficulties of the Netherlands with reducing prices on the German border. Those difficulties are also incorporated in the fuel price inquiry report. As those matters are being considered by the Westminster Government, it is questionable whether we can usefully add to the process. We should concentrate on matters that we can directly affect—such as the differential in fuel prices between urban and rural Scotland—and we should meet the petrol retailers. Obviously, we await the OFT report. We should certainly draw the Scottish Executive's attention to a number of issues that arise as a consequence of both courses of action.

From the evidence that we took, my main impression was that the differential—although we were able to clarify some of its elements—does not offer much room for manoeuvre on the whole quantum of the petrol price. We managed to tease out from some of the petrol retailers the fact that distance and volume are significant factors on the price that will be charged at the retail outlet.

I thought that the second SPICe paper on European petrol retailing was extremely interesting and offered opportunities that should be investigated. I am very sympathetic to Fergus Ewing's comments. We are not in a position to produce a complete report just yet; however, it would not be complete if we simply restricted ourselves to the investigation proposed by Allan Wilson. With the knowledge that we have gained from the SPICe paper, the committee needs to communicate with the Executive and seek clarification on one or two of the issues that Fergus Ewing highlighted. Perhaps the Executive will then want to communicate with both UK and European authorities.

We know that prices in Scotland are the highest in Europe. I cannot believe that such a situation can prevail without some attention being given as to how it has arisen. Although derogation seems a very exclusive facility that is currently available only to very few member states, I cannot believe that that avenue is not worth investigating.

I am not suggesting that we should restrict our investigation per se; I am just saying that we should follow our initial intention and concentrate on the fuel price differential between urban and rural Scotland as the point of inquiry that would have maximum effect. I am quite happy to investigate derogation issues with the Scottish Executive and Westminster Government; I understand that those matters are under investigation anyway. I am more concerned about the evidence provided by the Petrol Retailers Association on the differential. Certain matters arose from the subsequent private session with the oil company that are worthy of further investigation and could have a positive impact on the issue. As I said, we should concentrate on the fuel price differential in future deliberations, which will obviously be informed by the OFT report.

I will try to draw this matter to a conclusion. Several points have been made about representations and issues of inquiry that we could make to the Executive. If the committee agrees, I will ask the clerks to formulate a letter seeking information about the points that have been raised this morning, which I will then send to the ministers. We should consider producing another report quite early in the autumn that gathers information on the OFT inquiry and from a meeting with the Petrol Retailers Association, which will happen before the end of the summer recess and will involve members who were deputed to undertake the inquiry.

That seems a sound way in which to proceed. However, it was suggested that we should have further meetings with the remaining oil companies. Could we do that?

We could undertake those meetings if we wanted to incorporate them into our inquiry. Are we agreed on proceeding on that basis?

Members indicated agreement.