MINISTERS should prepare for a “worst-case scenario” and consider scrapping fuel duty to ease pressure on Islanders as the US-Israeli campaign against Iran continues to spike Jersey fuel prices, according to the Island’s consumer rights watchdog.
Local costs have risen notably since the end of last month, with data tracked by the Jersey Consumer Council’s price comparison website Prices.je showing hikes in both heating oil and forecourt prices.
Some providers had already warned that this was a possibility, as the ongoing conflict continues to drive volatility within global energy markets.
Unprecedented volatility
JCC chair Carl Walker said: “The impact of the troubles in the Middle East have now filtered their way through and we are starting to see the early signs of what that looks like.”
Noting the potential effect on the cost of importing goods into Jersey, he also highlighted that “this doesn’t just impact those who heat their homes with heating oil or have cars”, adding that the rising fuel prices could eventually be “passed down to the consumables that we purchase every single day”.
ATF Fuels director Jon Best told the JEP that “the volatility in the market is unlike any I’ve seen before”.
He continued: “I’ve worked in the industry 25 years and I’ve never seen daily fluctuations over a period of time such as these.”
UK response
UK Prime Minister Sir Keir Starmer yesterday unveiled a £53 million support package aimed at helping vulnerable households weather the hikes in fuel and heating oil.
He acknowledged that: “I’m not going to stand here and pretend to you that we all know what the situation will be in three or six months’ time – we don’t. The best way through this is to de-escalate and reduce the conflict.”
A key area of focus amid the current diplomatic struggles revolves around disruption to the Strait of Hormuz, a crucial shipping lane through which a fifth of the world’s oil would usually flow.
Sir Keir described this as “one of the pressing issues of the day”.
“It’s something I discussed with President [Donald] Trump yesterday on the phone. There have been discussions going on in relation to a viable plan.
“We want to make sure that that involves as many partners as possible. That’s been our stated objective here, particularly talking to European partners, inevitably talking to Gulf partners and to the US, because we need a credible, viable plan.”
He went on to highlight that: “Ultimately, we need to get the straits opened, otherwise the price of energy will remain very high for reasons that everybody understands.”
Mr Best said: “Common sense would say the quicker the conflict ceases, the price pressures would reduce and, conversely, if it continues for an extended period of time then there is a risk that the price increases will continue.”
He noted that: “As a distributor, particularly the size of the distribution market in Jersey, we have no influence over the wholesale prices. We are as beholden to the wholesale market movements pretty much as the end user.
“What we can do is just continue to be transparent with our customers. We are communicating price changes when and if we have to pass them on.”
Government ‘should not make money out of a cost-of-living crisis’
Mr Walker said that the government “should be preparing for the worst case scenario and then how it might respond to that”.
“From a consumer perspective, what we have to remember is that as the price of fuel and heating oil rises, so does the amount of GST that the government charges on those items,” he continued.
“It doesn’t feel right that the government should be making money out of the cost-of-living crisis, which is ultimately what happened last time.
“We don’t think that the government can remove GST off fuel overnight. However, there is a large proportion of duty on our fuel costs, plus there is a climate emergency surcharge on our fuel costs – so there are levers available to the government which could be tweaked under ministerial approval rather than a States debate to ease the pain for Islanders.”
Major spikes in energy costs were also seen in the wake of the Russian invasion of Ukraine.
Mr Walker added that: “Rather than sit back and wait to see if we enter a similar situation to 2022, we should be having those discussions and making those preparations right now.”
He also urged retailers who might have to put prices up to be “transparent and honest with consumers about why it’s happening and make sure any increase is as short-lived as possible.”
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