THURSO CALLS ON GOVERNMENT TO TACKLE HIGH FUEL PRICES IN NORTH

12.00.00am BST (GMT +0100) Wed 11th Jun 2003

Initiating a debate in the Commons today on Petrol Prices in Rural Areas, Caithness, Sutherland and Easter Ross MP John Thurso will urge the Government to confront the heavy burden of high petrol and diesel costs in the Far North.

Commenting before the debate, John Thurso said:

"Today, my office telephoned a wide range of garages to check on pump prices. This revealed price differentials of between 9-13 pence per litre higher in the Far North as compared with Inverness, and 2-3 pence per litre higher in Inverness than the Central Belt.

The EKOS study (January 2000) demonstrated that residents in the Highlands on average have 24% less spending power than the Scottish average yet, due to higher motoring costs, have additional expenditure of approximately £88 millions which equates to 3% of Highland gross domestic product. Of this figure, £17.8m is attributable to higher fuel prices. If this sum were diverted to general expenditure, it would create 592 full-time jobs within the Highlands economy.

For residents in remote areas the car is a necessity and there is no alternative. It is the very people who have no choice and who have the lower income who bear the heaviest burden."

"Since the Labour Government in the 1960's adopted Jo Grimond's idea which became the HIDB, and now HIE, billions have been spent - quite rightly - on trying to ensure a sustainable population in remote areas and a sustainable economy.

I can think of no measure that would aid this objective as effectively and as cost effectively as eliminating the cruel and unnecessary burden of the fuel cost differential."

John Thurso will highlight two potential solutions: first, a reduction in VAT to 5% for fuel in remote areas; second, a reduction in excise duty for remote rural areas, either of which scheme could be administered by postcodes.

John Thurso will also highlight the lack of competition, noting that in Australia and the United States oil companies are not permitted to own forecourts.

The Government has already recognised that vertical integration of wholesalers and retailers is bad for competition. Pubs are the obvious example where the brewers were obliged to divest their tied houses. The Government might therefore consider a similar divorce between oil companies and forecourts to promote upstream price transparency.