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
    +4

    Comment number 60.

    If the cost of oil is 47.3p per litre, then why the hell can the Americans sell it for 52p a litre and we have to pay over 135p for the same stuff? It's an absolute disgrace.

  • rate this
    +1

    Comment number 59.

    Pointless moaning. Nothing will change They are private companies and the government currently ( not) driving the leadership bus very well love the private sector and don't like regulation as it is deemed to be state interference Well done for all the people who voted for them but are writing aggrieved messages here

  • rate this
    +2

    Comment number 58.

    Esso use to advertise

    "We check the prices so you don't have to"

    What a misleading statement !

    They checked the prices to see how much they could charge without losing profit through lost sales.

  • rate this
    +1

    Comment number 57.

    Whatever happened to the fuel duty stabiliser? Oh yes, of course, it was based on the dollar crude price rather than the sterling price at the pumps, so as the price of crude has tumbled about as fast as the pound has collapsed against the value of said dollar, we've reaped double negative benefits from it. Great stuff, Mr Chancellor.

  • rate this
    0

    Comment number 56.

    Supermarkets will solve the crisis. They used to offer 5p off a litre if you spent £50 in store, now it's a staggering 10p off a litre if you spend £60 in store. In time they will lose out moreso on petrol profits just to retain your custom and ensure they make more profit on your instore purchase. In time expect 15p off per litre with every £80 spent instore, coming to a supermarket near you.

  • rate this
    +2

    Comment number 55.

    Shopping around helps, paid 12p per litre less only 15 miles from home.
    Scrap separate road tax and maybe even insurance and add to fuel prices, then nobody can avoid paying. Or get the 2 million cars without tax, insurance and MOT off the road, then we won't have any traffic jams and wasted fuel!!

  • rate this
    +2

    Comment number 54.

    What chance of the government every doing anything about not only high fuel cost but high energy costs in general - the answer is nothing. They are all too busy ripping tax payers off. They DON'T CARE, they were all born with silver spoons stuck somewhere. Maybe they should stop giving billions of tax payers money to other countries and sort out this country first.

  • rate this
    0

    Comment number 53.

    I am coping about as well as this and the previous government ran the country. Thanks for asking.

  • rate this
    +3

    Comment number 52.

    so when are trading standards looking at government

  • rate this
    +16

    Comment number 51.

    It would be cheaper and more efficient if the Government just took everything I have and then gave me back a small allowance each month to live on. Actually it seems as though that's what they do already...

  • rate this
    +2

    Comment number 50.

    Another review that will Achive sweet nowt!!!!!!!!!!!!!!!!!!!!!!!1

  • rate this
    -4

    Comment number 49.

    21. nefer
    Roll on affordable solar panel driven cars!
    ---
    I roll on mine for shopping, commuting and the school run. Who says you can't store solar energy - the potatoes I'm about to eat are full of it! Much of this argument would disappear if we dropped the 7.5t limit in our built-up areas to 0.5t. Solar energy is already taxed a bit: you must own plan area that's not overshadowed.

  • rate this
    +17

    Comment number 48.

    Its easy to see a localised cartel operates in most towns. Where I live all garages are within 2p / ltr of each other. If I drive 12 miles to a nearby town ALL garages charge 4 or 5 p / ltr less. Thats not just obvious - thats another blatent case of 'rip-off Britain'.

  • rate this
    +64

    Comment number 47.

    A real scandal is the price of diesel.

    In most other European countries opting for diesel means a lower price.

    Not in rip-off UK of course - it'll cost you more.

  • rate this
    +3

    Comment number 46.

    This study should take under a week. Take the average price oil each week for the previous 10 years adjust this to take into account the exchange rate with the $ remove the tax taken by Government and you will have the real price of petrol each week for the past 10 years compare this to the average pump price and job done. Any bets what you will find - oil companies making ever greater profit!

  • rate this
    +2

    Comment number 45.

    How can British industry compete with countries that pay less tax on fuel...we're handicappd from the word go but no-one of any party as far back and including Wilson has ever seen this as being important....or are there hidden agendas?

  • rate this
    +3

    Comment number 44.

    I was going to say something but will cut to the chase - screwed!

  • rate this
    +3

    Comment number 43.

    It would make more sense if the UK government to cut their tax duties on petrols and diesels. Saving the environment is important, but it is also unreasonable or unfair to impose such high taxes on fuel commodities consumed by everyone. Feel like the public is robbed by the government under the "environmental" license.

  • rate this
    +1

    Comment number 42.

    @ 34 in my opinion, hydrogen will be the next big source of energy. Solar panels are too expensive and too fragile. A stone chip might mean a new car! Hydrogen suits our oil retail infrastructure and of course will probably fit right in with our current taxation policies. We are still many years from any major change.

  • rate this
    +3

    Comment number 41.

    60p in the pound tax , The OFT just need to ask the Government , try staying in the highlands where there isnt a public bus service as such , no trains, you need a car and we still have the highest prices in the UK even with the 5p a litre discount we get, How can the government double tax a product , , for an oil rich nation to have the highest prices in Europe is scandalous

 

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