Dáil Éireann - Volume 437 - 16 December, 1993

Adjournment Debate. - Proposed Surcharge by Oil Companies.

Mr. McGrath: Thank you, a Cheann Comhairle, for giving me the opportunity to raise this important issue on the Adjournment. The small village in rural Ireland sustains a scattered community and is the hub of activity for a community drawn from all walks of life. The decline in rural population has been ongoing and indeed the 1991 census of population demonstrated this very clearly. My own county of Westmeath is, surprisingly, the county with the third highest migration rate in the country, with some parts of that county showing a rural population decline of up to 20 per cent.

Commercial life in the rural village is paramount to the success and vibrancy of the local community and as one drives through rural Ireland one cannot be but impressed by the efforts of many of these small communities to enhance their villages with their efforts in the Tidy Towns competition and to remain vibrant.

Life in many of these small hamlets has been under threat from Government forces for some time. The closure of rural Garda stations has been ongoing and this Government does not seem to have the willpower to reverse that trend.

Mr. N. Treacy: That is not true.

Mr. McGrath: We continue to see small primary schools under threat and the new Minister for Education continues [1212] to allow primary schools to close and be amalgamated. The village post office has also been sought out as a possible victim of rationalisation. Some congregations have even experienced threat of closure of the local church, if they are unable to sustain the building and its environs. Many small communities have buckled under these closures and have allowed their communities to die. However many more vibrant communities have fought back and are continuing to fight against central bureaucracy, where their worth is not understood and where values of life in rural communities are not appreciated.

The latest threat to sustaining economic activity in small villages has come from major oil companies. In the last couple of weeks, a major Irish oil company has written to all its customers indicating that from 1 January 1994, a surcharge will be imposed on retailers purchasing quantities of less than 9,000 litres of product per delivery. This will have a devastating effect on petrol stations located in rural areas and will lead to higher prices. Hence, many of them will be neglected by their customers and subsequently will have to close.

It is important to note that many of these small stations do not have the capacity to store quantities of 9,000 litres and, even if they wished to co-operate with the oil company, they would not be in a position to do so. It is also important to note that demand for different types of fuel, for example, lead free, super, diesel, etc., has led to problems in regard to tank storage.

In a typical village in Ireland the petrol station is part of a small complex which usually includes a grocery shop and a public house. The closing of a petrol station in a small village means that people in that locality have to travel to the nearest town for fuel. Having made that trip they will no doubt complete the remainder of their shopping in that town. This will have the long-term effect of forcing local retail outlets to close, [1213] thereby further downgrading life in rural villages.

The Government is committed to stemming the decline of rural communities. It appointed a Minister of State with responsibility for this area and I am glad he is present tonight. The Minister should consider this serious issue and ensure that people who own petrol stations in rural areas are treated fairly. Having regard to the fact that oil companies operate under a motor fuel category licence, it should be possible to bring some pressure to bear on them, either through the Director of Consumer Affairs or the competition authority, to ensure that they do not close another service in rural Ireland. This oil company, in its pursuit of profits at the expense of rural communities, should remember the following words of Oliver Goldsmith, who lived in the locality where this policy will have most effect, in The Deserted Village:

Ill fares the land, to hast'ning ills a prey,

Where wealth accumulates, and men decay:

Princes and lords may flourish, or may fade;

A breath can make them, as a breath has made;

But a bold peasantry, their country's pride,

When once destroy'd, can never be supplied.

Minister of State at the Department of Agriculture, Food and Forestry (Mr. Hyland): I always listen carefully to the problems affecting the structure of rural communities. I listened carefully to Deputy McGrath but I do not share his view that the Government lacks commitment to preserve a vibrant rural infrastructure. One has only to look at the success of programmes such as the Operational Programme for Rural Development, the Leader programme, the small community enterprise scheme and other schemes, which are specifically geared [1214] towards dealing with the problems identified by Deputy McGrath, to see evidence of the Government's commitment to preserving a vibrant rural infrastructure.

For the first time a section of the Department of Agriculture, Food and Forestry has been given specific responsibility for rural development and I am glad the Deputy acknowledged that. I am proud to head up that section of the Department.

With regard to the matter raised by the Deputy, price control on petroleum products and the Restrictive Practices Order, which regulated the operation of competition in the industry, was abolished in 1991. The move was preceded by a report from the Fair Trade Commission which stated that price control was imposing costly distortions on the petrol retailing industry and that the consumer was deprived of the benefits of price competition. At the time the International Energy Agency also recommended the abolition of price control on petrol products.

Since price control was abolished we have seen good competition on price, between the petrol companies. This has meant that the consumer can shop around and is free to choose the best price. The consumer is assisted by the operation of the Petrol Display Order which is in place and is monitored on a regional basis by the Director of Consumer Affairs. In the past price controls and restrictions have hindered competition. By allowing the market to operate freely we can expect gains in efficiency and ultimate benefits for the consumer. We should think through very carefully any proposal to interfere with the operation of a healthy, competitive market.

With the abolition of price control and the Restrictive Practices Order, petrol companies were in a position to charge load premia. I would add that the issue of differential pricing based on quantity is not peculiar to the oil industry. The [1215] Fair Trade Commission in its report dealt with this issue and was of the view that provided the charges were equitable they could not be regarded as unfair discrimination. It also considered that it would be unrealistic to require a company to deliver very low amounts. These views are reasonable and I do not think that it would be in the overall interest of the consumer to require oil companies to operate uneconomic practices. We consider that by deregulating the minimum size of delivery we encourage economic distribution practices to the ultimate benefit of the consumer.

One key concern is, of course, to ensure an adequate spread of outlets to serve all parts of the country. Competitiveness in the market brought about by deregulation ensures that supplies are met. If one company finds it uneconomic to make small drops there will be another company prepared to do so.

The Deputy will also be aware that the Competition Act, 1991, contains important rules to ensure the operation of a competitive market and to outlaw abusive practices by dominant firms. This is an important protection for small companies and consumers. For example, section 5 of the Act prohibits an undertaking in a dominant position from directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions. It is open to the aggrieved person to consider taking an action in the Circuit Court against abusive practices.

Information available to me suggests that, in the main, oil companies are operating a system of load premia which is fair and reasonable. If the Deputy has information to suggest otherwise I would be prepared to consider the issue further.

I omitted in my opening comments to apologise for the absence of the Minister who is in Brussels on official business.