Fuel companies may have to disclose fuel margins

Iceland’s consumer group FÍB has proposed requiring fuel companies to report their margins from fuel sales separately, saying the information is difficult for market watchers to calculate. The proposal was reported by mbl.is.

FÍB’s calculations suggest fuel margins have risen gradually in recent years and are now about 20 Icelandic krónur per litre higher than during the Covid-19 pandemic. Without that increase, inflation might have been up to 0.15 percentage points lower, the group estimates.

The calculations also indicate that margins rose around the time fuel duties were removed and again when value-added tax on fuel was reduced during the summer months.

Benedikt Benediktsson of SVÞ questioned aspects of the calculations and said detailed disclosure of margins and pricing could conflict with competition law. He said it would be contradictory if measures intended to improve transparency and benefit consumers resembled practices the Competition Authority has considered capable of harming competition.

Benedikt also noted that a company’s margin is not the same as its profit. Margins must cover costs such as distribution, stockholding and operating service stations, so the figure alone says little about the actual profitability of fuel sales.