Petrol and diesel price review is launched by OFT

 

The OFT's Ann Pope says that action could be taken against the entire industry or individual businesses

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The UK petrol and diesel sector is being put under the microscope by the fair trading watchdog amid rising prices at the pumps.

The Office of Fair Trading (OFT) will spend six weeks gathering evidence about whether competition is being curtailed.

The watchdog will also consider whether falling costs of crude oil are reflected in prices paid by motorists.

It will publish its findings in January.

The OFT said that the UK retail road fuels sector was estimated to be worth about £32bn.

Petrol prices rose by 38% between June 2007 and June this year, and diesel prices went up by 43% over the same period.

In June, the government announced it would postpone its 3p-a-litre rise in fuel duty from August until January.

'Widespread concern'

The OFT said the review, which is not a full-scale investigation by the watchdog at this stage, would study whether the action of supermarkets and oil companies made it difficult for independent retailers to compete in the market.

Petrol prices international comparison graph

The review would also look into whether there was a lack of competition at the pumps in rural areas.

"We are keenly aware of continuing widespread concern about the pump price of petrol and diesel and we have heard a number of different claims about how the market is operating," said Claire Hart, of the OFT.

"We have therefore decided to take a broad based look at this sector, to provide an opportunity for people to share their concerns and evidence with us.

"This will help us determine whether claims about competition problems are well-founded and whether any further action is warranted."

Start Quote

Now at last we should get a definitive answer on how the market works”

End Quote Stephen Glaister RAC Foundation director

A significant chunk of the price paid by consumers on petrol is tax, which will not be covered by the review.

'Overdue'

The Department for Transport has previously suggested that industry should come up with a voluntary code of conduct to ensure wholesale price falls were passed on within a fortnight to the motorist.

A spokesman for the department said: "We have had discussions with suppliers and retailers before and during the summer. Now the OFT has launched its own investigation it is right that we wait and see what that turns up.

"Many motorists are concerned about fuel prices and that when crude oil prices fall, this is not seen at the pump as quickly as consumers would like. We look forward with interest to the findings of the study."

How to save fuel when you are driving

Stephen Glaister, director of motorists' group, the RAC Foundation, said: "We have always argued for pricing transparency and this review promises to provide it. Now at last we should get a definitive answer on how the market works.

"We also welcome scrutiny of what the rapid decline in the number of petrol stations has meant for fuel supply and price. In 1990, there were some 18,000 forecourts. Now there are fewer than 9,000."

Meanwhile Edmund King, the president of the AA motoring organisation welcomed the OFT's decision but said the move was "overdue".

The latest figures from Experian Catalist show that the average cost of a litre of unleaded was 138.99 pence on Tuesday. The average price of a litre of diesel was 143.52 pence.

Earlier this year, the Retail Motor Industry Federation raised concerns with the OFT about the ability of independent traders to compete in the market.

Similar concerns about prices at the pumps have led to investigations from regulators in Germany, Spain and Australia.

Meanwhile, motorists in the UK have been warned to check online MOT certificates when buying a car, rather than looking at a printed out version.

The Trading Standards Institute said that the paper documents could easily be altered by fraudulent sellers.

It urged motorists to check the actual record and full details on the VOSA website, accessed through Directgov.

Breakdown of the cost of petrol graphic
 

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  • rate this
    -7

    Comment number 20.

    When the government raises or lowers fuel duty, the oil companies will put up their prices in advance and then blame the government for the rise. It doesn't matter how much tax there is on petrol, the oil companies are charging hundreds of times what it costs to produce.That's why they are the most profitable companies in the world. In any case, if they cut fuel tax, they would tax other stuff.

  • rate this
    +123

    Comment number 19.

    Perhaps they could also look at the fact that we pay 'VAT' on 'duty', ie; a tax on a tax. So how does that work then?

  • rate this
    +2

    Comment number 18.

    The OFT 'probe' is a total waste of time and money. If things do kick off in Syria/Iran then what we are paying today for fuel will look a bargain.

  • rate this
    +14

    Comment number 17.

    The cost of fuel has risen so much because both Tory and Labour governments increased tax very heavily. There is no other common commodity where 80p in every 132p goes straight to the government to pass on to their rich friends. Scrap fuel duty and tax the rich effectively.. Remember, the reason poor people are poor is because the rich people have taken more than their fair share of the money.

  • rate this
    +118

    Comment number 16.

    Have you noticed that as cars have become ever more fuel efficient, so the price keeps on raising ?

    So, cars do more mpg, which means lower sales of petrol, so the price goes up to compensate for lost income. Clever that.

    (And it's true for gas and electricity as well; now we all have more fuel efficiently boilers and energy saving light bulbs - prices go up to compensate).

  • rate this
    +4

    Comment number 15.

    It won't change a thing, it really won't

  • rate this
    +28

    Comment number 14.

    Now that all diesels have catalytic converters fitted is there still a justification for the higher rate of VAT on diesel. I think perhaps not especially as diesel give better fuel economy and is therefore marginally less bad from the carbon emission point of view.

  • rate this
    +2

    Comment number 13.

    And the review will find nothing wrong, and will continue ripping us off.

  • rate this
    0

    Comment number 12.

    Why does it take six weeks to figure out what most of us already know. You can google the data in miliseconds for gods sake! The OFT are toothless and are incapable of implementing any change as both government and corporations are ripping us off. It's tax and a monopoly combined. Another waste of public money to give some fluffy report that does nothing at the end of it.

  • rate this
    +2

    Comment number 11.

    Let's see.
    Oil prices reduced = fuel prices increasing
    Interest rates reduced = mortgage rates increasing

    A definite trend emerging here based purely upon greed and, the ability to get away with greed.
    Goodbye Cameron, Osborne and, the rest of your cronies who accept this legalised crime dressed up as 'business'.

  • rate this
    +28

    Comment number 10.

    Petrol prices affect everything else. If the government wants to hold prices steady, this is the obvious place to start.

  • rate this
    +3

    Comment number 9.

    You don't need a review to see that motorists are being ripped off. Everybody has observed that the fuel price increases as crude oil goes up yet doesn't seem to come down as much when it reduces in price. At least we'll be able to see by how much the oil barons are ripping us off by. Even if crude oil fell to record lows the cost of fuel will never fall below £1.20 a litre, strange that.

  • rate this
    +1

    Comment number 8.

    Strange when the government announced that there would be no increase in fuel duty at the start of August, since that date petrol has gone up by least 7p in our area. Looks like the oil companies taking advantage of the governments announcement not to increase fuel duty and taking the extra few pence for themselves.

  • rate this
    +3

    Comment number 7.

    Nothing will happen. There's too much money at steak. Someone will get a large brown packet of cash and this will all go away again. Prices will only come down if people stop using fuel. So that's probably the end of that then.

  • rate this
    +21

    Comment number 6.

    Why are they not investigating governments, the high price of petrol and diesel is down to taxation?

  • rate this
    +2

    Comment number 5.

    The petrol companies have been ripping us off for years and so too the electric and gas companies. Everytime there is an increase in the price of oil up go the prices, but they come down with great reluctance when there is a fall in the oil price. We don't need a review to tell us that there is a cartell at work and it is time to stamp on it.

  • rate this
    +1

    Comment number 4.

    I only read the first few sentences and then stopped because I'd already made my conclusion.
    The problem isn't the oil companies it's the government that doing the thieving.
    The only other point I'd like to make is why is the OFT doing this review when there's nothing whatsoever they can actually do about the prices even if they do 'find' what we all already know?

  • rate this
    +4

    Comment number 3.

    Not before time. The price of unleaded has increased by 3p per litre in the last 48 hrs at my local Tesco. Scandalous!

  • rate this
    +1

    Comment number 2.

    another review from another trading body do you think it will say were being ripped off no it wont . it wont change anything so whats the point

  • rate this
    +36

    Comment number 1.

    3 things that decide the price of petrol:

    1) Cartel pricing – prices never vary by more than 1p a litre between suppliers

    2) Huge amount of tax

    3) HMG know we can’t live without a car, so they know we have no choice but to pay the price asked

    6 weeks to gather evidence and then another 3 months to look at it ?

    I’ve just solved it for the OFT – where do I send my consultancy fee to ?

 

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