Cloudy picture of growing petrol prices

Business Opinion:  It has a familiar ring to it by this stage

Business Opinion: It has a familiar ring to it by this stage. There is bad weather in the Gulf of Mexico or the situation in the Middle East takes a turn for the worse and within what seems like hours the price of petrol has jumped another couple of cents on the litre.

This cycle of cause and effect has seen petrol prices here jump by 15 cent to €1.17 per litre over the last 12 months with more to come, courtesy this time of the hostilities between Israel and Hizbullah in the Lebanon.

But the relentless march of petrol prices has also served to focus consumer attention once again on the issue of competition in the petrol market, and the perception that there is some sort of cartel or cartels operating at either a local or national level.

The main driver of this seems to be widespread belief that petrol prices at the different stations move up in unison, almost to the cent and the hour.

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But, it must be stressed, there is no information in the public domain on when and by how much suppliers and retailers increase their prices. As a result there is no evidence to support the view that all the petrol stations are putting their prices up at the same time and by the same amount. It must also be remembered that such behaviour is not in itself proof that a cartel exists.

The only people who keep any sort of tab on petrol prices - apart from the companies themselves - is the AA, who carry out a monthly survey of some 200 garages across the state. However, the AA does not collect its data in such a way that allows any robust analysis of whether or not prices are moving in unison across regions and companies.

That said, there are plenty of interesting trends in its data according to AA spokesman Conor Faughnan. The most significant is that prices tend to vary on a regional basis rather between different brands. As a general rule petrol is cheaper in Cork and Kerry, but more expensive in Donegal and along the Border.

The AA also points to a lack of transparency about prices, with the major oil companies reluctant to share any data on prices, other than the proportion of the price which is accounted for by excise duty.

The companies will argue that such information is commercially sensitive and that they can only control prices at the stations they own and operate, which is the minority. In addition the wholesale prices they charge to the independent operators who run the rest of the stations will vary depending on factors such as the volumes they buy and the cost of delivery.

The decision by Shell this month and Statoil last year to sell their Irish distribution business to the Topaz consortium puts yet another link in the chain between the big oil companies and the price that appears on the forecourt sign. As a result forming a true picture of what is happening is almost impossible.

It was the lack of such hard evidence that presumably prompted someone to take a classified advertisement out in this paper recently. It called on employees and former employees of fuel companies to contact them if they had any information "regarding the possibility of price distortion policies arranged between fuel importation and supply companies". The address given is an Irish Times Box number, C10385, but the newspaper is not behind the placing of the advertisement.

A copy of the same advertisement has been sent to the chief executives of the major oil companies operating here, who have somewhat cheekily been invited to blow the whistle on each other and avoid any possible prosecution.

Such a prosecution would be brought by the Competition Authority which is aware of the advertisement placed in The Irish Times, but was not involved in placing it either. However, the authority would obviously be very interested in any information that might surface as a result on the advertisement.

The issue of petrol prices is never far from the authority's mind apparently, but it needs some sort of hard information before it can act.

It has brought a number of prosecutions in the past against petrol retailers and earlier this year succeeded in prosecuting a number of home heating suppliers in the west of Ireland. In that case the investigation was triggered when an individual came forward with details about meetings at which prices were being fixed.

It will be interesting to see what, if anything, comes of the advertisement placed in this paper. Is the petrol industry's answer to James Gogarty waiting out there?

John McManus

John McManus

John McManus is a columnist and Duty Editor with The Irish Times