Launching the scheme for a 5p cut in petrol and diesel prices in Scotland's island communities this week, Treasury Secretary and Highlands MP Danny Alexander claimed: "This discount will deliver real benefits to motorists and businesses in remote island communities." Perhaps that statement ought to be a question because some drivers are claiming already that the cut merely cancels out price rises in recent weeks.
The Coalition Government deserves credit for getting this pilot scheme up and running, and in particular the Liberal Democrats for whom it represents the fulfilment of a manifesto pledge. To do so, they had to gain the agreement of not only the Chancellor but all 27 other EU finance ministers.
However, it will be an empty gesture if the cut in fuel duty is swallowed up by rises in costs along the supply chain and the motorist ends up paying the same price as before. All schemes of this kind rely on a degree of trust. Has there been profiteering or are prices merely the reflection of volatility in the global oil market?
Recent history suggests that retailers in rural areas, far from profiteering, are struggling to survive. Low profit margins and cuts in forecourt sales have forced 4000 out of business in a decade.
Distributors claim they are simply passing on increasing prices. Sam Chambers of Scottish Fuels says profit margins have not increased since the business was acquired from BP in 2007 and that he makes just 2.6p a litre on fuel.
As former Labour Energy Minister Brian Wilson, a Western Isles resident, argues, to identify factors influencing price rises there needs to be more transparency in the supply chain. This matter should certainly be referred to the Office of Fair Trading, if an investigation suggests profiteering.
Another issue is why this scheme is restricted to the Scottish islands, while remote communities on the mainland, in both the Highlands and the Borders, suffer the same triple whammy of high fuel prices, long journeys to work and little or no public transport. Unless the scheme is rolled out further, it is likely to engender more resentment than gratitude from voters.
The elephant in the room is the 57.9p of duty plus 20% VAT that the Treasury takes on every litre of fuel sold in the UK. This is a deliberate policy of successive governments, aimed at decreasing dependence on fossil fuels, reducing congestion and curbing pollution. However, it is a policy that penalises unfairly those living in remote rural areas, where salaries tend to be lower, where car ownership is a necessity and traffic jams are not an issue. As an indirect tax, it is regressive, hitting the poorest hardest. Also it seems paradoxical that energy-rich Scotland should suffer some of the highest fuel prices in Europe.
Population projections published this week reveal the pressures on the remoter rural areas. If Scotland is to avoid a repeat of the Highland clearances, more must be done to encourage people to settle and stay in such areas. That includes finding a way to ensure that the inhabitants are not being held to ransom every time they fill up at the pumps.
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