Mr. David Blevings:

I thank the committee for the opportunity to address it. I am joined by four of our retail members. I thank the Chair for introducing them and I thank them for giving up their time to present to the committee. The Irish Petrol Retailers Association is a trade association for independent retailers in Ireland. We lobby on issues that affect our members and have no financial interest in or give any advice on pricing to our membership. Our members are mostly family-owned businesses who until recently were seen as essential workers during the pandemic and who worked tirelessly to keep services going for the nation. That positive view of retailers has been severely damaged in the past two weeks.

We have approximately 500 members across the Republic, who purchase fuel from the major oil companies based on the previous market day closing price. Retailers are emailed a daily wholesale price which gives them the purchase price of fuel for next-day delivery. On Monday the wholesale price shows the price for fuel on Tuesday delivery. Retailers have no control over wholesale pricing. The heightened political tensions resulting from the invasion of Ukraine and the package of economic sanctions imposed by the West in response resulted in an unprecedented increase in prices for crude oil, which led to increased prices for refined products, as most countries were concerned at the potential loss of Russian oil supply and the effect that would have on the market.

It is important to note that fuel retailers have no control over wholesale prices. If an increase is applied at wholesale level, the retailer has to pass this on to retain profitability. To not pass on increases would be commercial suicide. Regarding the claims of retailers gouging during the week of 7 March, our retail members on this call have advised us that on the two days - Tuesday, 8 March and Wednesday, 9 March - the market moved up approximately 11 cent per litre for unleaded and more than 18 cent per litre for diesel, meaning that retailers who purchased fuel on Wednesday, 9 March paid €2.03 per litre for diesel and €1.98 per litre for unleaded. On Thursday, that increased to €2.05 per litre for diesel and €2.17 per litre for unleaded. These prices were supplied by the retailers on this call and they can confirm that if required. When our members buy fuel, they commit to buying 38,000 litres per order and, depending on the size of the station and frequency of sales, that load of fuel could last up to a week as independents tend to be smaller sites selling lower volumes. In a volatile market, they cannot sell at a quick pace and have been stuck with a lot of fuel in the ground at very high prices.

When Government announced that excise cuts of 20 cent per litre and 15 cent per litre would take effect from Wednesday midnight, retailers could not implement this immediately without taking a huge hit and losing money on stock in the tanks. As an example, one of our members who is present advised that they bought fuel on Tuesday, 8 March before the excise cut and could not pass on the reductions. They sold the product at a loss, resulting in the loss of approximately €6,000 to €7,000 per site. During this difficult week, due to the messaging from Government, we saw widespread abuse of retailers, bordering on violence. Some retailers advised that their staff refused to come to work following the abuse they received from customers over the reported allegations of gouging and profiteering in the media.

We explained this to the Minister, Deputy Michael McGrath, and the Ministers of State, Deputies Troy and English, via a video call last Friday, 11 March and there was general acceptance that retailers who had bought fuel before the duty change could not have passed on the decrease until they sold what was in their tanks. We have asked for that to be clarified by Government but to date we have seen nothing in the media to support that. Government messaging should have followed up the call about the cut in excise duty with a statement that the decreases would not be immediate because of fuel in retailers' tanks purchased before the excise reduction.

Moving forward, it is imperative that Government engages with the sector before making such statements. While we welcome the excise cut, we believe reductions could go further. An obvious option would be to reduce VAT on fuel sales as this would be a clear benefit for consumers and, as it does not affect stock, a much easier proposal for retailers.

To conclude, retailers have no control over the price they pay for fuel and purchase it as required at the daily wholesale prices. With the war in Ukraine, supply problems and a shortage of diesel, most retailers increased their stock levels prior to the excise cut. The more stock retailers had in, the more they lost. The retailers suffer the loss when the Government reduces the excise duty as they have bought the stock in and paid the higher duty prior to the cut. Smaller retailers are worst affected as it takes them longer to sell a load of fuel if they bought it at the wrong price. They cannot afford to take the loss on a full load of 38,000 litres plus the stock in their tank. They cannot increase the price as they become uncompetitive at the pump with reduced sales, as well as the negative publicity when Government announced the price going down. A lag time must be allowed for retailers to change prices. The key question I hope we will address today is how we can stop this happening again. I thank the committee.