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
    +1

    Comment number 40.

    so with tax duty and vat the government gets 60+ pence per liter add car tax and all other taxes we moterists pay i.e parts labour and so on then the government want to add more levy in january this is scandalous

  • rate this
    +2

    Comment number 39.

    A Code of Practice will be introduced to allow the petrol companies to continue to rip off the public and allow the politicians to say they did something. Do not expect anything but spin.

  • rate this
    +4

    Comment number 38.

    So the Government are to have a review of the petrol companies, Try reviewing yourself Mr Cameroon. If petrol cost £1.36p a litre you get approx 80p to go in your coffers, which includes taxes & VAT. You also get taxes & VAT on the profits from the petrol companies & petrol stations profits, So you get about £1.00 for every litre that is sold, It's the Tory party that needs reviewing.

  • rate this
    +15

    Comment number 37.

    Fuel tax
    Road tax
    Service tax
    The list keeps on an on
    I just can't work out where does all the tax money goes.
    Not on roads not in school or hospitals ect. Can anyone tell me ?

  • rate this
    -11

    Comment number 36.

    Get used to this high standard of living as over the next 20 years Britons are in for a shock as the arctic summer ice eventually melts completely. The cost of fuel will be the last thing on your minds as you clean up after relentless extreme summer weather, and to think we contributed to it's melt just so we could get from A to B in a short amount of time.

  • rate this
    +5

    Comment number 35.

    Over 60% of the cost of every litre goes straight into the taxman's coffers. If the oil companies put the price of a litre up by a penny, it actually increases at a much faster rate as you pay an extra 60%+ on top to the government. Taxation is the real reason for high fuel prices.

  • rate this
    +40

    Comment number 34.

    21. nefer
    Roll on affordable solar panel driven cars!
    ---
    And I'll tell you what will happen; They will introduce a Automotive Solar Panel Tax.

    You just wait until battery powered cars start becoming mainstream - then there will be a Car Battery Tax, you mark my words.

  • rate this
    +1

    Comment number 33.

    Petrol giants colluding to rip off the public? Of course, standard corporate behaviour these days: the company gets a fine which is just passed on to their customers - ditto banks, supermarkets, utility companies etc. The fatcats running the companies carry on regardless. Time to change the law to make them personally responsible in law for anti-competitive practices, I think.

  • rate this
    +1

    Comment number 32.

    I agree with many of the comments re- the Government taking too much tax, however and reduction in tax on fuel means they will have to take the tax from somewhere else.
    Perhaps if they stopped wasting our tax money and refrained from fiddling expenses, lining the pockets of cronies and took a pay cut themselves we could find a reasonable tax rate.

  • rate this
    +1

    Comment number 31.

    The oil companies have us over a barrel on this one, literally. If we somehow attempt to restrict the price, they simply sell the stuff overseas. If we reduce the fuel duty they simply absorb the margins by raising the fuel price. This is far more complicated than many people seem to think. An OFT study may be a good idea, but what people really want is cheap fuel. Don't hold your breath!

  • rate this
    +3

    Comment number 30.

    We are at the mercy of the producers of oil.
    We are at the mercy of the taxation requirements of Gov.
    Everyone benefits from oil so it is a quick source of revenue that cannot be avoided even by the very rich.
    Raise the tax, increase inflation, -Been here before - many many many times.

  • rate this
    0

    Comment number 29.

    I think what annoys the motorist most is that duty collected on fuel is not used to improve roads or help the motorist in any way manner or form - in the end this is just exttortion as the government refuses to invest in an alternative such as a connected modern public transport system, even bringing back the trams would be a start - this government as the ones before it are just a disgrace

  • rate this
    +23

    Comment number 28.

    @20.inchindown

    "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 is the most false statement I've ever read on HyS

    Taxman takes most of the money you pay at the pump, the oil company makes pennies per litre at most, the garage itself makes nothing and relies on you buying a chocolate bar while you're in there.

  • rate this
    +4

    Comment number 27.

    Next week a commission investigates the toilet habits of bears and the religious outlook of the Pope...

  • rate this
    +13

    Comment number 26.

    When the government takes 64% tax on unleaded fuel it look pretty silly for government ministers to be pointing the finger solely at oil companies.

    But the Police, councils, goverment, insurance companies, garages etc are all profiteering on the back of motorists.

  • rate this
    -25

    Comment number 25.

    Sometimes I feel sorry for you paying extortionate prices at the pumps, struggling to feed and clothe you and your household. Then I remember - you chose this life - then I chuckle a little - then i laugh a lot!

  • rate this
    +54

    Comment number 24.

    We don't need a prolonged review/investigation into this.Its obvious we're being ripped off,time and again.What we need is action now and prices cut as fast as they raise them.

  • rate this
    +23

    Comment number 23.

    The OFT should investigate price gauging by the tax-man, something like 75% of the price of petrol at the pump goes straight to George Osbourne.

  • rate this
    +34

    Comment number 22.

    The main reason petrol/diesel prices are so high is the Government thinks it is entitled to 80p+ per litre, scheduled to rise to an even more extortionate level in the coming months.

  • rate this
    -2

    Comment number 21.

    Roll on affordable solar panel driven cars! or will this really stop governments ripping us off anyway?

 

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