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 160.

    Good for you mikepalace, hate to think that you were filling up your BMW for you and a stranger! You just wouldn't know who was going to benefit from your worldy wisdoms!
    Lots of complaining, few solutions or action. 1, pick a single petrol company. 2, promote boycotting their outlets. 3, monitor their prices and switch when they drop 10%, repeat. Last step, compain to OFT about fuel duty.

  • rate this
    +5

    Comment number 159.

    Welcome to rip off Britain!

    They got you by the short and curlys no matter how you try to do anything.

    Dont take the car get a train they say, only its over £150 to go to London!

    GET FUEL PRICES DOWN AND RENATIONALISE WHAT THATCHER STOLE AND SOLD!

    Were paying the reaper now..being robbed by the very things our tax built to begin..

  • rate this
    0

    Comment number 158.

    Get used to high prices because it isn't going to get any cheaper. We have reached peak oil production and with demand rising it will only get more expensive.

    The western economies have been built on cheap oil and gas and it is going to come to and end.

    Oil, a hundred million years in the making, used up in a century, it should be far more expensive.

  • rate this
    0

    Comment number 157.

    140.
    I was responding to another post that did suggest exactly that.

    143. Price does have something to do with cost - look at the chart in the article. Of course, there are other factors that determine prices and one of those is how much a retailer can charge without losing customers. More competition between providers would likely reduce retailer profits. Tax contributes most to high costs.

  • rate this
    +5

    Comment number 156.

    Pay tax for my car, duty on petrol, VAT on top of the duty, congestion charges and soon tolls to use the road. How many time do I have to pay the same tax?

  • rate this
    -1

    Comment number 155.

    I cope very well as I don't live in rip off Britain.

  • rate this
    -2

    Comment number 154.

    "How are you coping with rising petrol prices?"

    Very well thank you. I am one of a tiny minority who uses their own legs to reach work. It's very pleasant except for the noisy, pollution spewing vehicles that never indicate and try their best to run me over.

    I hope the price of petrol continues to increase so that the roads become quieter.

  • rate this
    +1

    Comment number 153.

    Stop tax on fuel, cigarettes, booze, VAT, everything and collect the revenue via a percentage of earnings, same percentage across the board. Simple.

  • rate this
    +1

    Comment number 152.

    150. mikepalace
    What a muppet.

  • rate this
    +4

    Comment number 151.

    There is a simple way to get petrol prices lowered. If all MP's were made to pay for their own fuel costs rather than putting it on their expenses they would soon do something about the level of tax charged.

  • Comment number 150.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +4

    Comment number 149.

    Once upon a time we paid politicians to make decisions.
    Now politicians pay quangos to make decisions.
    What do we pay politicians for?

  • rate this
    +4

    Comment number 148.

    Everyone except this incompetent government knows that we are,and have been ripped off for years......does it need a review to find out what we all know?

  • rate this
    +4

    Comment number 147.

    The "price" of petrol actually has very little to do with the wholesale cost of oil. 60% of the fee goes straight to the govt in tax, and the rest goes in transportation, storage and other fees. This review is grossly misleading.
    If you want to complain about prices, direct your ire at HMRC, otherwise nothing will ever be done.

  • rate this
    +1

    Comment number 146.

    Haha. And who is responsible for the high price of fuel in the UK? Talk about using stage misdirection to deceive the audience!
    http://www.thisismoney.co.uk/money/cars/article-2108641/Petrol-prices-Is-price-diesel-really-cheaper-France-compared-Britain.html

  • rate this
    +1

    Comment number 145.

    Look at the fuel prices at the 2 stations at the end of the M67 in Mottram. BP and Texaco. The prices are always identically high. But we all know private enterprise forces down prices don't we? And, competition drives down prices as well. What do they call people who mend shoes?

  • rate this
    +4

    Comment number 144.

    When unleaded was introduced the price of diesel was said to be temporarily increased to subsidize the cost of producing the then new unleaded petrol. So when is it going back down in line with the continent? Oh it's not, I forgot we are in Britain, see a saving for the general public and remove it, we can't have the oiks making headway old chap we have to keep them down at all cost..

  • rate this
    +5

    Comment number 143.

    Steven @100...
    "Fuel prices vary according to location because costs associated with transporting fuel vary with location. Why should urban drivers subsidise rural drivers?"

    Why is fuel cheaper in Portsmouth than Southampton - the fuel comes from Fawley refinery, near Southampton?

    Because the price has nothing to do with the cost, the price is what they can charge before we start complaining.

  • rate this
    +2

    Comment number 142.

    Investigate ? What a joke. Half the number of suppliers, massive cross ownership between oil companies, other global corporations and investment funds run by banks, half the number of petrol stations and three times the level of demand. And the Government is funded by leaders of all of them. Hands up who knows what will happen ?

  • rate this
    +1

    Comment number 141.

    I like how the average price above is 132.7, but yet the very cheapest I have seen/saw in July was 133.9

    The reason they put the prices up is because they know that people need it and will pay regardless. But the government has as much blame as the rest as the amount of duty on there is ridiculous, not to mention the extra 3p per litre RIP OFF!!!

 

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