The regulation of fuel retailing activities and its contribution to a rural development policy

: lessons from the UK and Australian jurisdictions

Abstract

Limited competition among the few fuel retailers in rural and remote locations results in fuel pricing problems, such as high rural fuel prices and rural-urban fuel price differentials. Thus, the regulation of fuel retailing activities in these locations is expected to resolve these problems, and thus contribute to a rural development policy. These problems are of concern to governments and rural communities, primarily because high fuel prices generate significant multiplier effects on the cost of rural living and economic activities. Therefore, the purpose of this study was to investigate the potential contribution of the regulation of fuel retailing activities to resolving these problems. The UK and Australian fuel retail sectors provided contrasting settings in which to conduct this investigation. Preliminary research outcome indicated that governments’ responses to these problems were generally in the form of regulatory support mechanisms and fuel subsidy schemes (a form of state aid).The study focused on two research questions. The first question relates to whether the regulation of fuel retailing activities could resolve the fuel pricing problems in rural areas, and thereby contribute to a rural development policy. The second question deals with the necessity or otherwise of the use of state aid in resolving the problems of fuel retailing in rural and remote areas. This study investigated the research questions by adopting the qualitative comparative methodology, involving three actions. The first action entailed the use of a set of common comparators to examine fuel retail regulations in the two jurisdictions. The comparators consisted of the following regulations: sites, licence/franchise, retail/wholesale price, fuel tax. The second and third actions involved a comparison of state aid policies and trends in rural development policies in both jurisdictions.The study revealed that these fuel retail regulatory measures have limited effectiveness in addressing the research problems. However, the author argues that regulation of fuel retailing is likely to contribute significantly to resolving the research problems within the context of an integrated approach to rural development. The author further argues that this approach could lead to a paradigm shift in the mix of fuels consumed in rural and remote locations, and hence cause a reduction in fuel prices as well as the rural-urban fuel price differentials. The key recommendations flowing from this study was that the UK Government could take advantage of the various EU state aid provisions to promote a robust and integrated rural development policy. On the other hand, the Australian Government could consider developing a more formal and integrated approach to rural development policy, rather than its current ‘ad-hoc’ approach.

Date of Award	2010
Original language	English
Awarding Institution	University of Dundee
Sponsors	Petroleum Technology Development Fund (PTDF), Federal Government of Nigeria, under the Overseas Students Scholarship (OSS) Programme
Supervisor	Peter Cameron (Supervisor), Paul Stevens (Supervisor), Peter Cameron (Supervisor) & Peter Cameron (Supervisor)