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
    +2

    Comment number 80.

    To those posting comments about companies ripping off consumers; take the time to examine the chart in this article.

    Taxes contribute most to the steep price of fuel in this country - retailers have a margin of c.5% that has to cover their costs and then have some left over for profit. There's no need for some QUANGO to spend more taxpayer money on a needless review - reduce fuel tax.

  • rate this
    +1

    Comment number 79.

    Any chance of a petrol price war between the big supermarkets?
    My local Sainsbury's and Morrison's occasionally have a few pence off petrol when you shop with them and I shop at whichever has the offer on.
    Figures must prove they still make an overall profit or they wouldn't do it?
    It would also stuff the oil owned ones that are more expensive anyway!

  • rate this
    0

    Comment number 78.

    So Mike your point is.....

    Trolling along I think.

    25. mikepalace
    33 MINUTES AGO
    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
    +1

    Comment number 77.

    It really annoys me when the cost of oil goes down and the fuel doesn't reduce in price in the same % as the oil.

    Should only be a maximum of three price rises per year and each time 2p maximum

  • rate this
    +1

    Comment number 76.

    47 Other Colours: you're right, the price of diesel is a disgrace. You have Gordon Brown to thank for that. What is the point of an investigation, when we are being ripped off by government? The vast majority of what we pay is tax. No review is going to get the exchequer to back off. Motorists are a cash cow, now and forever, amen.

  • rate this
    -5

    Comment number 75.

    This government are engaged in a war on the motorist.

    But where are the fuel protestors now ? Strangely silent.

    Petrol is approaching £1.50 a litre.

    Election now please.

  • rate this
    +4

    Comment number 74.

    What annoys me is that two months ago, petrol was 131.9p/l in my area (NW Leicester). There is a heavily advertised 'petrol price war' and the cost suddenly drops to 126.9p/l. Slowly this 'price war' ends and the cost of petrol rises on an almost daily basis until we reach the point we're at now -139.9p/l

    I wonder if we'd have these excessive rises if fuel was priced in gallons instead of litres?

  • rate this
    -2

    Comment number 73.

    We're all doomed, WE'RE ALL DOOMED!!

  • rate this
    0

    Comment number 72.

    Interesting though if you take off the cost of duty and related VAT (72p) you are paying about 65p/litre. However milk is not far off that, and as for trendy bottled water....I'd say fuel is a relative bargain .......

  • rate this
    +2

    Comment number 71.

    Old codgers like me Other Colours remember when diesel was a lot cheaper than petrol in the UK.

    Then the government of the day noticed the rise in sales of diesel powered cars, and that was the end of that.

    Like other folk on here, I feel that a good start would be petrol prices falling overnight whenever crude prices drop. They go up overnight when crude rises so why not? Fat chance.

  • rate this
    +2

    Comment number 70.

    I used to live in New Zealand and petrol was about a third of the price than in the UK, then again most things were the same. Maybe the OFT should do a far wider audit of goods within the UK as I think that they will find that consumers are being ripped off with most of them.

  • rate this
    +4

    Comment number 69.

    The price of fuel is a rip off, the government should not only be looking at the price of petrol but the cost of what the energy companies are charging the consumer for gas & electric, again a rip off.

    There are many people struggling to cope with the recession & the high cost of fuel in their cars to get to work etc, about time these no good politicians listened & stop ripping off the public.

  • rate this
    +32

    Comment number 68.

    If fuel duty was scrapped:

    Petrol would cost 80p a litre.
    It would be cheaper to drive to holiday in the UK, rather than fly abroad.
    I would more regularly drive from my rural home to the shops.
    I would spend the money I save at these shops.
    The government would get VAT from my purchases.
    Retailers would increase sales and employ more people.
    Industry would boom.

    Am I missing something here?

  • rate this
    +3

    Comment number 67.

    While we are being charged xx.9p at the pumps there is no way I'll accept that the companies are honorable!

  • rate this
    +2

    Comment number 66.

    The problem is not really petrol retailers playing about but crude
    oil prices. Years ago when crude was $15 a barrel Saudi wanted $30
    or so and said they would be happy with that. Now Oil is $100 a barrel
    and they are very quiet... Oil prices need to be taken off stock markets
    commodity trading/ speculating and a fixed price applied, perhaps
    $70 per barrel and revue'd annually.

  • rate this
    +2

    Comment number 65.

    Fuel duty & road tax is facing the axe in the next 15 years anyway. Revenue from fuel duty is dropping and the govt has forecast it to drop very sharply as cars become much more efficent and electric cars come on stream.Probably to be replaced with some form of pay per mile taxation which will probably just be another big rip off.

  • rate this
    +5

    Comment number 64.

    No expensive review required. The government shafts you with VAT and fuel duty with the majority of the pump price you pay going in the chancellors coffers.

  • rate this
    +1

    Comment number 63.

    "A real scandal is the price of diesel."

    why? It's more polluting than petrol, even more so than previously thought, and diesel production is awful for the environment.

  • rate this
    +2

    Comment number 62.

    Is this a joke after the review the price will go down for a short time then rise back again its obvious to even an idiot there is a cartel fixing prices

  • rate this
    +1

    Comment number 61.

    Ever notice price rises for bank holiday weekends and also in the period before a tax hike, so that it can be presented as if suppliers are absorbing the latter for a while? A Review is needed, with the teeth to implement recommendations. That said, many sped past me on the motorway today, incl white van at 80+ with a critical delivery of recycled shoes - suggests fuel cost is of marginal concern

 

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