New fuel price cut for rural areas?

If you live in Cornwall, parts of Wales and the Scottish Highlands then a 5p a litre fuel discount could be coming your way. The discount has already taken effect in the Inner and Outer Hebrides plus Scilly Isles.

But the Government has to persuade Brussels it's not breaking competition regs. There's also worry more price hikes will soon follow.%VIRTUAL-SkimlinksPromo%


Discount approval

Fuel tax discounts, approved by Brussels, have already been pushed through in certain parts of Greece and Portugal, and on the French island of Corsica, not to mention the UK. So a precedent has been set, the AA's Luke Bosdet told AOL Money - but, mind, there's a sting in the tank.

"Brussels has already acceded here. There is the beginnings of a precedent, provided Europe can agree how remote is remote. However, when the 5p a litre rebate was introduced on 1 March 2012, it coincided with a big 10p wholesale price increase too, peaking in April."

Shouting

"There was an enormous amount of shouting in the Scottish Islands," he goes on. "Rather than seeing the fuel go up, some islanders accused the retailers, the retailers accused the supplier, and the supplier was forced to say 'come and have a look at my books'. The simply fact was there had been a surge in the market."

In the event, the islanders only suffered half as much as other people in the UK, forced to take the full 10p wholesale hit. But without full fuel transparency, adds the AA's Bosdet, "how do you know if that 5p is being passed on its entirety? Without fuel price transparency, the retailer and the supplier are open to criticism."

Take control

More switched-on remote communities have actually taken over their fuel pumps. A case in point are the Highland villagers at Applecross - population 200 - who run their own community fuel pumps. Because of this they are able to control the prices better and profits are ploughed back into the community, opening the option for the community to discount the fuel price too.

Bosdet says they make their money with festivals, visitors buy their fuel there. "It's a template for remote areas. It's also common in Austria."

UK drivers short-changed

Meanwhile throughout 2012, the cost of petrol in the UK averaged 136.40p a litre and diesel averaged 142.48p. Wholesale prices continue to cause concern, hitting 54p a litre in early September. But by early December this had dropped back 7.5p.

With VAT added, this should have knocked 9p off the autumn pump price high of 140p a litre. "Instead, average petrol prices now are down 7.7p a litre, leaving the average UK driver short-changed by at least 1p a litre," says the AA.

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