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Seanad Éireann debate -
Wednesday, 16 Feb 1994

Vol. 139 No. 5

Adjournment Matters. - Availability of Unleaded Petrol.

I thank the Minister for coming to the House. I wish to draw attention to the present situation in relation to the price levels of unleaded petrol. In view of the growing awareness of the effect of leaded petrol on health and the environment, the motoring public should be encouraged to use unleaded petrol. There are two types of unleaded petrol available, Superplus unleaded which has an octane rating of 98 ron and Eurograde unleaded, also called premium or standard unleaded, which has an octane rating of 95 ron. Almost all cars can use the lower grade of unleaded petrol without any significant difference in performance.

When unleaded petrol was first introduced in 1986, many cars, particularly older models, needed a slight timing adjustment to take the cheaper fuel. The Superplus grade did away the need for this and served a useful purpose in the transition to unleaded petrol.

Since October 1990 it is compulsory for all cars sold in the European Union to be compatible with the 95 grade fuel, hence the term Eurograde. The number of cars which need to use the enhanced grade has been falling and is now less than 5 per cent of the total. It was reasonable, therefore, to expect petrol companies to encourage the use of the cheaper Eurograde and to ensure its availability at all outlets.

Since Government controls on petrol prices were lifted in 1990, consumer choice should have been encouraged by the petroleum companies. Yet until July 1993, the supply of Eurograde had not changed, while the supply of Superplus increased. The various oil companies cited difficulties in storage, market resistance and complaints about Eurograde as reasons for preferring to supply Superplus. While these may have been factors, it is hardly a coincidence that the fuel they chose to supply was more expensive. In the second half of 1993 the supply situation was ridiculous. As few as one in four service stations stocked Eurograde; that figure was as low as one in five in rural areas. Yet all service stations were stocking the more expensive fuel.

Understandably, the Automobile Association embarked on a publicity campaign at that time in an attempt to improve things with two specific objectives. The first objective was to inform motorists about the differences and similarities between the two types of unleaded petrol and to advise them to buy the cheaper fuel, thereby saving them a considerable amount of money. There is a misconception in the Irish market that Superplus was a better fuel because it was "Superplus" and was kinder to the engine. There is no technical basis for this belief. The second objective of the AA campaign was to bring pressure to bear on oil companies to improve the lamentable supply situation by publishing it and by encouraging motorists to complain on garage forecourts.

An embarrassed oil industry has said little or nothing in response to this campaign. It has not yet taken the necessary steps to ensure cheaper Eurograde unleaded is available at all outlets. Motorist have begun to insist on the lower grade fuel and its sale has increased dramatically. By the end of 1993, three out of four outlets were supplying the cheaper fuel, but it must be available at all outlets.

The breakdown of petrol sales in 1992 is as follows: leaded petrol, 65 per cent; Superplus unleaded, 28 per cent and Eurograde, 7 per cent. By the end of 1993 the figures were as follows: leaded petrol, 58 per cent; Superplus unleaded, 21 per cent; and Eurograde, 21 per cent. These figures are welcome and they show the awareness of the motoring public of the desirability of using unleaded petrol and the fact that Superplus unleaded does not add to the performance of a car.

The consumer demand for Eurograde is growing and is, to a large extent, a consequence of the publicity given to this issue by the Automobile Association. This trend also shows that the oil industry is capable of supplying the fuel. Arguments about storage capacity and market resistance proved specious when motorists started to complain by taking their business elsewhere. Within three months, companies which said people would not buy the cheaper fuel changed their stance in view of public demand and even offered incentives, such as 20p per gallon off 95 unleaded, although that was the price in any event.

This begs the important question, why did they not supply it in the first place? Oil companies have a special and privileged role in this economy. One must ask why they are not supplying this fuel to all rural and urban outlets at this stage. It is clear the industry was content to allow motorists continue to believe Superplus was superior. It may be unfair to say it created the misconception, but it did little to correct it. It was prepared to go on indefinitely making considerable profits on the difference.

Petroleum prices at consumer level have a considerable impact on the consumer price index and the Government is concerned to keep it below the level of inflation. It is important, therefore, to keep pressure on petrol companies to ensure the motorist is offered a genuine choice in line with that available in all EU countries where the supply of higher grade fuel has become increasingly obsolete and the supply of Eurograde outstrips it. It is important to maintain pressure on oil companies. In some outlets Superplus unleaded is still supplied in preference to the standard grade and this costs motorist a considerable sum of money.

Standard grade should be supplied universally and Superplus should, in time, be the exception. Superplus is a super way to waste money. Over 95 per cent of cars will run the same way on Eurograde unleaded. A top of the range sports car may notice a marginal difference in performance, but for everyone else the difference will be felt in the wallet.

I thank Senator O'Kennedy for raising this important issue. The consumer should have a wide choice; that is the essence of equity in the consumer market. In October 1993, the Automobile Association issued details claiming only one in four petrol stations nationwide stock lower grade unleaded petrol. I requested the Director of Consumer Affairs to look into the matter and inquiries were made. As Senator O'Kennedy said, Irish consumers, unlike most of our European counterparts except for la belle France, have tended to purchase higher grade petrol in the belief they were doing better. This tradition has extended to the newer unleaded petrols. Because of this, smaller retail outlets, limited in the number of grades of fuel they can stock, have tended to sell the higher grades of petrol.

However, the director's inquiries indicate that this situation is changing, as Senator O'Kennedy said, with more Irish consumers now moving towards the lower grades. Petrol companies have reacted by making the cheaper grade of unleaded petrol more widely available, again showing that if the consumer presses, the market reacts. The latest information available indicates that three out of four petrol stations nationwide are now stocking the lower grade unleaded petrol. I very much welcome that the market has reacted to meet the change in consumer preference. In saying that Irish motorists have tended to purchase higher grade petrol, the director informed me that when unleaded petrol was first introduced only the standard grade was available and motorists were very reluctant to purchase what was seen as an inferior product. It was only when the higher grade of unleaded petrol was put on the market that motorists began to switch to unleaded.

I am aware that the Automobile Association has for some time been expressing the view that almost all cars in this country can use the lower grade without noticing any difference in terms of performance or economy and that motorists in other European countries have been happy to use the lower grade. In this respect it is worth noting that in Ireland the higher grade accounts for 67 per cent of sales of unleaded petrol and the lower grade 33 per cent. In the United Kingdom the higher grade accounts for 13 per cent and the lower grade for 87 per cent of sales. In Germany the higher grade accounts for 8 per cent and the lower grade for 92 per cent of sales. In Denmark the figures for the higher and lower grades are 33 per cent and 67 per cent respectively. However, in France the preference is for higher grade which accounts for 91 per cent of sales.

It is also worth pointing out there is a difference between the higher and lower grades of unleaded petrol in terms of octane content and that some consumers may have a preference for the higher grade. It is essentially a matter of choice and my concern is that motorists should be free to exercise choice between the two grades.

In an ideal world every petrol station would have the capacity to stock both grades. However, the reality is that smaller stations, mainly rural ones, will be limited in the number of grades of fuel they can stock and the retailer may have to choose one over another.

They will not be using racing cars.

As I indicated, the latest information available indicates that in making their choice an increasing number of retailers choose to stock lower grade unleaded petrol. I am satisfied the market is functioning well in that oil companies and retailers have reacted positively to meet the shift in consumer preference. Why can retailers and providers not be ahead of what the consumer wants? Why do they sit back and wait for pressure from consumers? It is right that this pressure is exerted but a proper retailer or manufacturer of a product would ask what the consumer wants. Until we are ahead in terms of the wishes of consumers, we will not be in the race. I thank Senator O'Kennedy for his wisdom in raising this matter.

And saving us all money.

Consumers are dear to my heart. The Senator has given me a chance to say things on their behalf.

I thank the Minister. I am very conscious of her concern for consumers and I hope this will be a contribution to the very positive campaign in which she is engaged.

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