Petrol suppliers defend prices in filling stations

LEADING PETROL suppliers have defended themselves against charges of failing to pass on falling oil prices to motorists.

LEADING PETROL suppliers have defended themselves against charges of failing to pass on falling oil prices to motorists.

The price of a barrel of oil has fallen since the summer from $147 a barrel to about $89 today. However, pump prices have fallen by only 6 per cent, leading to accusations of profiteering against the sector.

However, Topaz, Maxol and Chevron Ireland (Texaco) told an Oireachtas energy committee yesterday that the price of crude oil internationally was only one factor influencing pump prices for petrol and diesel.

"Of course, the rises and falls in the price of crude oil are a factor on the price of the end product but the link is not as direct as is often portrayed," said Tom Noonan, chief executive of Maxol.

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The suppliers say it is the cost of the refined product, not crude oil, that determines prices in garage forecourts. Other factors that influence price are the dollar-euro exchange rate and supply and demand issues.

Mr Noonan said there was no unwarranted delay between movements in crude prices and the prices Maxol charged its dealers.

Danny Murray, the chief executive of Topaz, acknowledged that crude prices fell 24 per cent between June and September. However, as the dollar strengthened against the euro over this period, the real reduction was just 14 per cent. "When the 14 per cent reduction in refinery prices is applied to Irish pump prices it equates to a reduction of just 5.6 per cent because Government taxes make up such a large fixed portion of the overall price."

His company's margin on a litre of petrol was less than 1 cent, while the Government take in taxes and duty was 66 cent.

Fianna Fáil Senator Jim Walsh said petrol prices in his local station had remained static for the past seven weeks in spite of the fall in crude oil prices. Mr Noonan criticised "glib misconceptions" that petrol prices had not changed as a result of international trends.

Mr Murray said he would be surprised if there was any station in Ireland that had not moved on price in the past seven weeks.

Committee chairman MJ Nolan said his local garage changed its prices four times a day, increasing them at busy periods and reducing them in the afternoons. Was it acceptable that the public should be "fooled" in this way?

Mr Noonan described the practice as innovative, but said he would need more detail to answer the question. He said large price signs at filling stations meant consumers had a high awareness of prices, and this was in stark contrast to the grocery sector.

"Some supermarkets seem to hide behind artificially low pump prices in order to lure people into their stores, where they have an unfettered opportunity to manage the price for the goods on their shelves with impunity and then go to great lengths to avoid publishing the profits they make from their operations in Ireland."

Paul Cullen

Paul Cullen

Paul Cullen is a former heath editor of The Irish Times.