Price increases in the home heating oil and road fuel markets in recent weeks have not been “in breach of any law”, an investigation by the consumer watchdog has found.
The Competition and Consumer Protection Commission (CCPC) has published a report following significant price increases and calls from Government representatives to the public to notify it of high fuel prices and price gouging.
“This is in the context of conflict in the Middle East and the resultant impacts on international commodity markets,” the watchdog said in a statement on Thursday.
It said price hikes were driven by significant increases in international wholesale costs rather than competition issues.
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The CCPC has published details of more than 900 complaints received from consumers from the week of March 2nd.
While fewer than 5 per cent of complaints reported consumer protection issues with home heating oil suppliers, the CCPC found the vast majority articulated “high levels of distress and frustration at very sudden and significant price rises across essential fuel products”.
CCPC chairman Brian McHugh said the watchdog identified a “small number of questionable consumer protection practices”, but has not seen price increases that are in breach of any law.
“Ireland is an open market economy where businesses are free to set their own prices for goods and services,” he said.
The CCPC report sets out a markets analysis informed by previous research, a large number of merger investigations in road fuels and home heating markets, and a review of published profit margins. The analysis found that these markets are “reasonably competitive”.
A large number of consumers suspected that recent price increases were illegal and motivated in significant part to increase profits.
— Competition and Consumer Protection Commission (CCPC)
The watchdog said the number and nature of the complaints received “clearly demonstrate very high levels of worry and concern” among consumers.
From the beginning of the year to March 17th, benchmark wholesale kerosene prices increased by approximately 150 per cent. Over this same period, average retail prices for home heating oil increased by approximately 80 per cent.
“However, before we make comparisons, we need to account for the fact that we have estimated that wholesale prices drive around 70 per cent or more of retail prices during the time period under review,” the report said.
“This would indicate that a 150 per cent increase in wholesale prices would be expected to produce retail increases of around 105 per cent or higher.
“While we would caveat that these estimations are sensitive to assumptions and which exact dates are used, they indicate that the increase in retail prices experienced by consumers is lower than suggested by the corresponding wholesale price changes.
“These movements are consistent with a competitive market experiencing a major cost shock, not one in which suppliers have imposed disproportionate retail increases.”
Over the same period, wholesale benchmark prices for diesel more than doubled, the CCPC said, while wholesale petrol prices increased by around 70 per cent.
The corresponding retail price increases for diesel and petrol were 12 per cent and 6 per cent respectively, according to the European Commission’s Weekly Oil Bulletin, while the price increases recorded on fuelwatch.ie were 21 per cent and 10 per cent for diesel and petrol.
“An increase of more than 100 per cent in wholesale diesel prices would be expected to produce retail increases of 40 per cent or higher,” the report said.
“It would also indicate that a 70 per cent increase in wholesale petrol prices would be expected to produce a retail increase of 28 per cent or higher.
“This pattern is inconsistent with suppliers exploiting wholesale increases to impose unjustified retail price rises and instead aligns with competitive market experiencing a major cost shock.”
The CCPC also examined data on the financial performance of six operators – Applegreen, Certa, Circle K, Maxol, Texaco and Top Oil – and found that operating margins vary between them, but have been around 2-4 per cent.
