Global Price Reductions Must Be Passed on to Icelandic Consumers

Lilja Alfreðsdóttir

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.

Diesel Supplies to Run Dry Soon

driving in reykjavík

Due to an ongoing strike among oil truck drivers, petrol supplies are quickly depleting at Reykjavík stations, and representatives of major stations anticipate that supplies of diesel fuel will soon run out, Vísir reports. The CEO of N1 told the outlet yesterday that the company’s stations will close “one after the other” in the coming days. He is particularly concerned about the situation that may arise after the weekend.

Wage negotiations remain at a standstill

There is still no progress in the wage dispute between the Efling union and the Confederation of Icelandic Enterprise (SA); after Ástráður Haraldsson, the new temporarily-appointed state mediator, failed to inspire progress last weekend, members of the Icelandic Confederation of Enterprise (SA) voted to approve a lockout of some 20,000 workers. The lockout is set to begin on March 2 at noon.

Meanwhile, strikes among oil truck drivers – alongside employees at the Berjaya and the Edition hotels (in addition to the original 700 striking hotel workers and other labourers) – resumed last Sunday at midnight. Since then, petrol supplies have gradually begun to deplete.

Representatives of major stations anticipate that supplies of diesel fuel will run dry soon. The CEO of N1 told Vísir yesterday that the company’s petrol stations would close one after the other in the coming days. He also expressed particular concern over the situation that may arise after the weekend.

“The petrol situation is better, but with regard to diesel stocks, I fear that the situation will become difficult around or after the weekend … I really don’t want to imagine the situation after the weekend, but it will be serious.”

Many N1 employees are members of the Efling union. Regarding the planned lockout of SA, Hinrik stated that N1 employees were “not at all ready to stop working.”

Companies facing a similar situation

As reported by Vísir, other oil companies face a similar situation. The CEO of Olís told the outlet yesterday that the situation was “difficult” and that, in some cases, both diesel and petrol supplies had run out, or were about to run out, at some of the company’s largest stations.

Drivers can view Ólís’ inventory status at its various stations online.

As supplies slowly run dry, some drivers have resorted to hoarding fuel. Last week, a truck driver posted a video on Tik-Tok in which he filled huge plastic tanks with diesel fuel. The first reports suggested that the man had pumped approximately four thousand litres, but it now seems that the quantity was even greater. Such a thing is both illegal and highly dangerous,

Þórður Guðjónsson, CEO of Skeljungur, told Fréttablaðið yesterday that it was a matter of “grave” concern when drivers carry more fuel on board their vehicles than the law allows. He also maintained that records were broken at petrol pumps last week.

Lockout to have a greater impact than strikes

Þórður also told RÚV that the effect of SA’s lockout would be much greater than that of the strike. “Contractors who drive for us belong to Efling, and as a result, they will not be able to distribute anymore … as soon as the lockout begins, pretty much everything will come to a standstill.”

RÚV also noted that SA’s lockout would also have a major impact on oil companies’ service stations and lubrication and tire services, which the Efling strikes have thus far not disrupted.

Participation in lockouts “not optional”

SA issued a statement yesterday, stressing that the participation of companies in the lockout was not optional. The Confederation also published a list of exempt parties from the lockout that will be imposed on Efling members. These include all those who work in health and geriatric services, as well as the police, the fire brigade, ambulances, and search-and-rescue teams, in addition to civil defence and educational institutions.

As noted by Vísir: “In the event of a lockout, no one who works according to the collective agreements between SA and Efling may come to work unless they receive an exemption from SA’s executive board. Salary payments are cancelled during the lockout, as in the case of strikes, as stated on SA’s website.”

Efling Strikes: Gas Stations Could Run Dry as Early as Thursday

driving in reykjavík

The CEO of Skeljungur says that gas stations could run out of gas as early as Thursday if oil truck drivers begin strikes on Wednesday, Vísir reports. The Director General of the Confederation of Icelandic Enterprise has called the Efling union’s strikes “pointless.”

Strikes around the corner

There is still no progress in the wage dispute between the Efling union and the Confederation of Icelandic Enterprise (SA); strikes of oil truck drivers, Beraya hotel employees, and Edition hotel employees are looming. If no settlement is reached, strikes will begin this Wednesday, and if they do – oil companies’ provisions are expected to run dry quickly.

Þórður Guðjónsson, CEO of Skeljungur – Shell’s official reseller in Iceland – told Vísir yesterday that he was concerned about the situation. Efling union members have been preparing for the strike since they voted on the matter earlier this month.

“This is a matter of concern because Iceland is dependent on oil, and it is quite clear that this will hit us pretty hard if it happens. Since it was announced that a strike was planned beginning on midday, Wednesday, February 16, we began filling all of our supply tanks,” Þórður remarked.

It doesn’t take many days to empty a gas station, Þórður noted – even high-capacity stations like Orkan on Vesturlandsvegur (where the interview was conducted): “It will probably be empty on day two after the strike, so we’re talking late evening on Thursday, this station could start to run dry.”

The effects of the strikes could prove multifaceted: freight transport and tourism, for example, would suffer from the gas shortage, while various essential services would be exempted from the strike. “The police, ambulances, the fire brigade, our search-and-rescue teams, those who handle anti-icing, snow ploughs, the hospitals, back-up stations, and god knows what; these services are among those that would be exempt,” Þórður Guðjónsson observed.

The strikes are “pointless”

Halldór Benjamín Þorbergsson, Chair of the Confederation of Icelandic Enterprise, was interviewed on the radio programme Sprengisandur yesterday morning. He claimed that Efling’s strikes were pointless.

“There is no purpose to Efling’s current strikes. There are no negotiation meetings scheduled. The state mediator called a meeting last week, but Efling refused to attend. This is absolutely central to this discussion. Because the purpose and nature of strikes are to force the contracting party to conclude a collective agreement – but there are no meetings in this dispute. The only thing that the parties are waiting for is the Court of Appeal’s ruling, and when that ruling is made, the progress of the labour dispute will be determined,” Halldór Benjmaín stated.

If the Court of Appeal confirms the ruling of the District Court of Reykjvík, the Efling union would be forced to hand over its electoral roll (i.e. membership registry) and then vote on the state mediator’s proposal; their agreement would be the equivalent of a collective agreement.

“There are only two options that can arise. On the one hand, the members of Efling accept the mediation proposal, and the mediation proposal will then be the equivalent of a collective bargaining agreement, effective retroactively from November 1, 2022. Then, in fact, this cycle of collective bargaining in the Icelandic labour market would almost be over,” Halldór Benjamín concluded.