Higher petrol prices in the Isle of Man are more a matter of public perception than reality, according to the chairman of the island’s office of fair trading.

Responding to Tynwald questions from Onchan member Rob Callister and Douglas North member David Ashford, Martyn Perkins said rigorous checks were done to compare prices in the island with those in the UK and while there is a disparity between the two, it is not huge.

Responding first to Mr Ashford, Mr Perkins said Manx Petroleum, and Ellan Vannin Fuels (EVF), the two island suppliers, did not do forward purchasing of fuel and prices were contractually fixed according to the prevailing market prices.

Mr Ashford said prices seemed to go up quickly and come down slowly.

’Is this public perception?’ he asked.

Mr Perkins said there were two approaches to fuel purchasing: ’Hedging is committing in advance to buy stock on a fixed date at a fixed price. Forward purchasing is buying and storing fuel in one job lot; and both come with significant risks: you might pay less on a falling market, but you might end up with stock that costs a lot more than the falling market.

’People travel back through Lancaster and see the price of fuel at some of the supermarkets and they don’t take account of the fact that many sell fuel as a loss leader to attract people into the shop.’

He added prices were monitored regularly but if the market was falling it was only fair to sell existing stock at the buying price, so decreases in cost took time to kick in.

’But I will ask why it seems to come down more slowly,’ he said.

Mr Callister wanted to know why, on average, island fuel prices seemed to be six to 10 pence higher than in the UK.

Mr Perkins told him our prices were ’benchmarked’ by the OFT against a range of specific sites in the UK and this was done on a regular basis.

Using this method, and according to figures taken on January 27, island prices were on average, 3.19p per litre higher for petrol and 2.19p higher for diesel.

Overall, he said prices were dictated by a number factors. In the island there were two suppliers, each with a relatively small turn-over, the fuel is shipped here from the UK in small tankers, the two depots both have overheads to meet and, finally, the island has 19 petrol stations where, in the UK, a similar population would probably sustain five.

Mr Callister said his own research on Monday suggested UK prices were 8p cheaper but Mr Perkins said his information came from an official guide to petrol and diesel prices.

Bill Henderson MLC pointed out both Shell and Total had pulled out of island operations.

’For the petrol stations to make a viable profit, they all have to operate a corner shop in tandem with the petrol sales,’ he said.

Mr Perkins reminded people that 57.95p of the price of a litre of petrol was duty.

Mr Callister said he thought the petrol tanker ships came to the island en route to Ireland rather than making a special journey. Mr Perkins said he would check.

David Cretney MLC pointed out Mr Henderson was a former chairman of the Office of Fair Trading.

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