Why has the price of fuel not dropped to the UK's low levels?

Due to the effects of Covid-19, the price of and demand for fuel has substantially decreased. I have friends in the UK who are currently buying petrol at around £1 per litre, yet in Guernsey the price has stayed the same or with a negligible price decrease. At the time of writing, I believe the cheapest place to buy petrol is around £1.23 per litre. With this in mind, why are Guernsey vehicle owners still getting so exploited? Why has the price not dropped to the low levels seen in the UK? More importantly, when will Guernsey see petrol prices at £1 per litre, or it that just wishful thinking?

I have a feeling many people would like to know the answers to these important questions. I am going to anticipate that one reply this letter might receive relates to the ‘surplus reserve’ that Guernsey might have and the fact this must be used before more petrol is bought. If that is the case, and considering the facts contained in this letter and the time between the decrease of petrol and the writing of this letter, some three months, I am surprised Guernsey is not swimming in surplus petrol, diesel and other fuels at the moment…

KEVIN HAINSWORTH

Address withheld.

Editor’s footnote: Robert Cornelius, president of the Guernsey Motor Trades Association, replies:

Thank you for the opportunity to respond to the reader’s letter regarding fuel prices in Guernsey. The first place to start with regard to fuel pricing is the amount of duty charged by the respective governments. At present, the duty charged by the UK government for fuel is 57.95p per litre; this is over 14p per litre less than the duty charged in Guernsey by the States, which is currently 72.3p per litre. As of 29 May 2020, if we use the Guernsey fuel and oil watch pricing information, the lowest advertised petrol price in Guernsey was 119.9p per litre. If Guernsey’s duty was in line with the UK amount of 57.95p per litre, then the price of this fuel would be just 105.55p per litre. However, duty on fuel is something that can only be decided by the States of Guernsey. Another point that we need to remember, which seems to have been forgotten, is that back in the early 2000s, the States of Guernsey abolished the annual road tax and moved to a polluter pays policy by adding an amount to fuel; this is probably another reason why the duty is the price it is, however we have to remember that in the UK they still pay an annual road tax, so it is not added onto their fuel price.

In response to Guernsey having a surplus of fuel, a fuel wholesaler would be better placed to answer this point, however garages/fuel forecourts that actually supply the fuel to the end user only take an amount of litres as and when they require it. The GMTA would also like to point out that the last two to three months are probably not a fair time to make that comparison, as we have been through unprecedented times. With the lockdown in Guernsey, and it goes without saying that fuel usage has declined massively. In our opinion, you would need to look at this over a normal two to three month period where fuel usage has not been impacted.

We hope the above response answers some of the individual’s points raised in their letter, and hope all islanders are enjoying the easing of restrictions in the Bailiwick.