Global Price Reductions Must Be Passed on to Icelandic Consumers Skip to content
Lilja Alfreðsdóttir
Photo: Golli. Lilja Alfreðsdóttir.

Global Price Reductions Must Be Passed on to Icelandic Consumers

The Minister of Culture and Business Affairs has encouraged Icelandic petrol companies to do their part in the effort to curb inflation. The minister calls for the reduction in the price of fuel on the global market to be passed on to Icelandic consumers, RÚV reports.

More competition needed

Lilja Alfreðsdóttir, the Minister of Culture and Business Affairs, maintains that it is urgent that the Icelandic petrol companies take part in the fight against inflation – and return price reductions on the global market to Icelandic consumers. According to the minister, the companies have not provided adequate explanations for price differences in Iceland and Denmark.

“The global inflation rate is falling because oil and energy prices are falling globally. And we demand similar price reductions in Iceland,” Lilja stated in an interview with RÚV. The minister pointed out, by gesturing towards data from the Competition Authority [and basic economic principles], that when the competition has increased, prices have fallen.

“Which tells us that vigorous competition is important. It must also be said that when you look at prices in Iceland and Denmark, the difference, in my opinion, is too great for the petrol companies to explain,” Lilja added. She encouraged petrol companies to participate in the fight against inflation.

“What I think is most important is that the price reduction that is taking place on the global market is passed on to Icelandic consumers. The ministry has been looking into this market, and the same hold for the Competition Authority, and we will, of course, continue to monitor this market. But I think it is very urgent that the petrol companies take this to heart,” Lilja concluded.

CEO of Skeljungur denies that prices have been kept high

In an interview yesterday, the Director of the Competition Authority (Sammkeppnisstofnun) argued that greater competition in Iceland would translate into lower petrol prices. The CEO of Skeljungur, Þórður Guðjónsson, denied the claim that the petrol companies have been keeping prices unreasonably high:

“Iceland is not a big country,” Þórður told RÚV, “and I think it’s certainly inaccurate to speak of a kind of multi-competition, which is the antonym of oligopoly. There are four companies that import petrol in Iceland. There are five companies that sell petrol at their gas stations. So I think there is a decent competition there.”

When asked if the companies were still keeping the prices abnormally high, Þórður responded in the negative: “No, I wouldn’t say so.”

As noted by RÚV, the companies that import petrol to Iceland are Skeljungur, N1, Olís, and Atlantsolía. Þórður stated that it was unfair to compare price trends of petrol in Iceland with global market prices for crude oil as there are no oil refineries in Iceland:

“No one imports crude oil into Iceland, for there are no oil refineries in Iceland. We need to import refined petroleum products. These petroleum products come from Norway – from Mongstad in Norway – where Equinor is the only supplier in Iceland; it has a pretty good hold on the country. There is no possibility for us, the petrol companies, to get oil from anywhere else. All of us have to buy separately, as competition does not allow joint purchases of fuel, which would strengthen our position in the importation of fuel.”

As to Lilja’s point about price differences between Iceland and Denmark, Guðjón gestured towards the fact that there are oil refineries in Denmark, which allows Denmark to purchase crude oil.

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