Myself and some freinds from south spent 2 weeks in Iceland touring about in 2008, before the Icelandic banking problems started . Back then it was about 138-140k to the pound and it worked out fuel prices were slightly more than south prices but slightly cheaper than Shetland prices ( so worked out good for me ) , within a few pence either way . So probably the exchange rates due to the Icelandic banking problems is why the prices are cheaper in Iceland . But still back in 2008 , Faroe fuel prices was about 98p per litre , about 30p cheaper than local prices