asked the Minister for Industry, Commerce and Energy if he will make a statement to the Dáil concerning the alleged request by him to the Irish petroleum companies to reduce their retail price levels arising from exchange rate changes and their increased levels of profits.
Ceisteanna—Questions. Oral Answers. - Petroleum Products.
14.
I requested the Irish oil companies to reduce their prices arising from the improvement in the exchange rate of the pound sterling. As announced by me on 3 November 1978 the companies were unwilling to reduce their prices, and accordingly, I made an order putting into effect a reduction of ½p per gallon in the companies' prices for all oil products as and from Saturday, 4 November 1978. As indicated in the announcement of 3 November, I decided that the reduction of ½p per gallon in the wholesale price of petrol should be given to petrol retailers to provide reasonable margins for these traders in accordance with a recommendation of the National Prices Commission in June last.
Is the Minister of State satisfied that the reduction of ½p is the maximum that could have been put through at that time? It would appear that a larger reduction was possible. Was that in line with his request to the companies?
The companies did not volunteer to reduce prices and the Minister had to make a decision on it. This indicates the size of the reduction would have been well and truly considered.
Was the size of the reduction based on that request? What was the basis of the reduction?
It was based on the calculation in the Department.
On the dollar-pound relationship?
Yes.
15.
asked the Minister for Industry, Commerce and Energy if the oil companies will reduce oil prices as a result of changes in the value of the dollar; and if he will make a statement on the matter.
The oil companies were unwilling to reduce their prices to take account of the appreciation of sterling vis-á-vis the US dollar and I made an order putting into effect a reduction of ½p per gallon in the companies' prices for all oil products as and from Saturday, 4 November 1978.
What further arrangements have been made with the companies if the dollar continues to depreciate?
The Deputy can be assured that this will be an on-going process and that the Minister and the Department will keep in close contact with the oil companies.
Why could not the public have benefited from the exchange rates?
By recommendation of the National Prices Commission last June, the petrol retailers were to expect a reasonable margin for their efforts and the ½p was passed on to them.
Why were the oil companies not requested to give retailers a bigger price margin?
They are now giving the retailers a bigger price margin.
The reduction in the price of oil consequent on the variation in the exchange rate of the dollar should have been passed on to the public. I am asking the Minister of State why the oil companies were not asked to give a bigger price margin to the retailers because this ½p reduction should have been passed on to the public.
If the recommendation of the National Prices Commission had been acted on in June last it would have meant an increase of ½p on the price of a gallon of petrol. This was postponed. Because of prevailing circumstances, the ½p is now being given to the retailer.
When the price increases the public have to pay, but when it is reduced they do not get the benefit.
16.
asked the Minister for Industry, Commerce and Energy if he will make a maximum price order for all brands of petrol at the lowest prevailing price, and at a still lower price in the case of self-service filling stations.
17.
asked the Minister for Industry, Commerce and Energy why maximum prices orders in respect of petrol of the same grades, vary from one company to another.
With the permission of the Ceann Comhairle, I propose to take Questions Nos. 16 and 17 together.
The different maximum retail prices for petrol are related to wholesale prices which in turn reflect the differences in the operating costs of the companies concerned and their marketing arrangements.
In present circumstances I do not think that it would be in the interest of the consumer to make a maximum retail prices order on the lines suggested. As a result of the actions which I have taken, petrol prices in Ireland are now lower than those in the corresponding zone in Britain.
Lower than where?
The corresponding zones in Britain.
What sort of zones? In certain zones in Britain and in part of the Six Counties, petrol is 17p a gallon less than the fixed price here. Where the zone is that charges more than or as much as we do is a mystery to me. That does not really come into my consideration in this question. I am asking the Minister to ensure that the lowest justifiable price should be applied to all petrol of the same octane rating. A new overall flat order should be applied to petrol of the same octane rating, regardless of from which company it emanates. Where there is a self-service, which is a developing feature of the petrol distribution, an order should be made for a still lower price, rather than leaving the situation as it is now, with people being put out of work, large amounts of money being spent on a system where the customer does the work while the distribution and oil companies reap the benefit.
I will deal with the second part of the question first. In the conventional service station the man or boy operating the pumps normally collects the money as well. In the self-service situation there must be someone in an office collecting the money for the petrol sold. I believe there is very little difference in the overall running costs in these two systems. Regarding the other part of the Deputy's question, there are commercial and distribution practices involved which would militate against the type of order suggested.
Surely the Minister should not take into account the inefficiency of the distribution system operated by some companies. Where full self-service has replaced the old manual system, has the Minister taken into account the reduction in employment? There is no justification for this. Encouragement should not be given to people to reduce employment while the public still have to pay the same price for petrol.
That is a statement.
The Deputy can be assured that at all times we are attempting to improve the employment situation. Having examined the situation and the suggestions made by the Deputy in his question, I am satisfied that the original answer stands.
I would ask the Minister to check again the erroneous information as to the relativity between prices here and those in any zone in Britain and to reconsider the price-fixing mechanism. There is a scandalous racket in regard to petrol distribution, pricing and self-service operations.
18.
asked the Minister for Industry, Commerce and Energy if he has noted the public statement of a firm (details supplied) that they will be in a position to offer petrol for sale below the price of other outlets; and if it is intended to encourage further price-cutting ventures.
I am aware of a report about sales of petrol by a certain company at reduced prices. I welcome such competition and all similar developments that are of benefit to consumers.
Does the Minister consider that there is any scope for the further encouragement of similar efforts in other parts of the country which would be of benefit to the consumer? Obviously there is a lack of competition.
A number of independent operators are involved in reducing prices. I welcome such competition and all similar developments throughout the country which are of benefit to consumers.
Does the Minister not consider that the only true encouragement he can give is to fix the level of prices by order at the lowest rather than the highest price?
I answered that in the previous question.
19.
asked the Minister for Industry, Commerce and Energy if a shortage of Irish oil supplies is likely as a result of the cut-back in Iranian oil production; and if he will make a statement on the general oil supply situation as it affects this country.
I have no reason to believe that a shortage of Irish oil supplies is likely as a result of recent developments in Iran. I would expect that alternative supply arrangements will be made by the oil companies in the event of any prolonged cut-back in Iranian production.
The Deputy is no doubt aware that this country, as a member of the International Energy Agency, would participate in an oil-sharing system which would be activated if supplies to any one country or to all countries in the agency fell by 7 per cent or more.
The Minister has probably read reports about the great unease internationally regarding oil supplies from Iran and about whether the Saudi Arabians would be able to take up the shortage which could result. Is the Minister making inquiries about this at international level and what are the long term prospects for our oil supplies in the event of further dislocation of supplies from Iran?
There have been contacts on this at international level through the International Energy Agency, of which we are a member. The matter is under review. In the event of an oil shortage, the existing supplies will be divided among members of the IEA.
What is the extent of our present supply contracts?
About 10 per cent of our oil supplies come from Iran. I understand there are varying suggestions as to the extent of the reduction in Iranian oil production. There is already six weeks' supply of oil on the high seas anyway.
What is the amount in storage here?
I have not that information.
Does the Minister consider that our membership of the IEA is of benefit?
This is an old chestnut.
I have asked a question.
It is not related to the original question.
The Minister said that in the event of a world shortage of oil there would be a division of existing supplies in which we would be entitled to participate because of our membership of the IEA. Does the Minister consider our membership of this body to be of benefit?
The question of membership was debated in this House during the term of the previous Government and the decision was made that we should join. Since we are now members, we will take full advantage.
When that debate was taking place the spokesman for the then Opposition, Deputy Barrett, and the present Minister for Industry, Commerce and Energy said that if we joined the IEA they would immediately resign from it if they came back into Government.
We have not resigned.