Increased Cost Lessens Impact of Fuel Duty Cut

The Chairman of the Office of Fair Trading says the cut in fuel duty has been offset by a rise in the wholesale cost of petrol and diesel.

The UK Chancellor announced a 5p per litre reduction in the duty of petrol and diesel from 57.95 to 52.95 ppl, which took effect from Wednesday March 23 2022 at 6pm and will continue until March 2023.

As the island has a Customs Sharing Arrangement with the UK, that cut in fuel duty was extended to the island.

John Wannenburgh MHK explained that road fuel duty is paid by the fuel companies Manx Petroleums and Ellan Vannin Fuels prior to deliveries to the retail forecourts. The higher duty had already been paid on the stock of road fuel that was in the tanks at petrol stations when the cut in fuel duty announcement was made. This meant that retailers sold the existing stock at a price including the previous duty rate of 57.95 ppl.

He said: ‘As the previous stock was consumed, both fuel suppliers passed on the 5 ppl reduction in duty at the forecourts. The OFT has been communicating with both fuel suppliers to ensure that the cut in duty has not been used as an opportunity to generate greater profits on the fuel they sell.

‘Petrol and diesel prices in the Isle of Man are collected on a weekly basis by the OFT and this has been taking place for many years as part of its commitment to monitoring the road fuel market. On March 25 2022, the price of unleaded petrol was 153.9 ppl and the price for diesel ranged from 162.9 to 179.9 ppl.’

The Douglas North MHK said that in the first week of April both companies received new shipments but that ‘unfortunately, the increase in the wholesale price of the new stock, in particular diesel, was greater than the 5p reduction in duty’.

As of April 8, unleaded petrol ranged in price from 149.9 to 153.9 ppl at the forecourt, whilst diesel ranged from 164.9 to 170.9 ppl.

Mr Wannenburgh said: ‘I can therefore confirm that our data demonstrates that both suppliers have passed on the duty reduction, but in effect, any gains from the cut in duty have to some extent been offset by the recent increase in wholesale costs.’

The OFT continues to monitor prices and data is viewable on the OFT website:

https://www.gov.im/about-the-government/statutory-boards/isle-of-man-office-of-fair- trading/competition-and-markets/road-fuel-monitoring/