OFT says UK petrol market is working well


OFT's Anne Pope: "Most of the increases are due to crude oil prices and tax and duty"

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Motoring organisations have expressed disappointment after a study found drivers are paying fair fuel prices.

The Office of Fair Trading (OFT) study of the UK petrol and diesel market found that little action is needed.

"The evidence gathered by the OFT suggests that at a national level, competition is working well in the UK road fuel sector," its report said.

Motoring policy body the RAC Foundation said the report gave 'little comfort" to motorists.

And there were other misgivings from the Petrol Retailers' Association and pressure group Fair Fuel UK.

The OFT said there was very little evidence that petrol and diesel prices rise quickly when oil prices go up, but are slow to fall when prices drop.

"We recognise that there has been widespread mistrust in how this market is operating," said OFT chief executive Clive Maxwell.

"However, our analysis suggests that competition is working well, and rises in pump prices over last decade or so have largely been down to increases in tax and the cost of crude oil."

But the OFT found that fuel was significantly more expensive at motorway service stations and was concerned that motorists were not able to see the prices until they had left the motorway.

The report asked the Department for Transport to introduce new signs on motorways to display prices.

It also said that while it did not plan to do any more work on the national fuel market, it might still take action in some local markets if there was "persuasive evidence of anti-competitive behaviour".

Independent retailers had complained that oil companies and supermarkets had been using their scale to give themselves an unfair advantage, but the regulator found no evidence of this.

Brian Madderson from the Petrol Retailers' Association, which represents independent forecourts and made the original complaint to the OFT, said the findings were "a grave disappointment".

"This is the sort of thing that the OFT and the establishment have done many times before," he said.

Petrol Retailers' Association's Brian Madderson: "This is a grave disappointment to independent retailers"

"They have failed to take on the big players in the market - the oil companies, the supermarkets - and have left the smaller independent businesses to their fate."

He questioned why wholesale petrol prices had gone up seven pence a litre since Christmas when refineries were saying they had a glut of petrol and demand had been hit by wintry weather.

'Drivers' misery'

The investigation into the £32bn sector was launched in September last year.

Since September it has been hearing evidence from trade bodies, government and regulatory organisations, consumer bodies and motoring groups.

Motorists in Plymouth say they have seen prices rise and rise

"This report will give only limited comfort to the UK's 35 million drivers who continue to pay near record prices at the pumps, but the OFT does identify the true cause of drivers' misery - the chancellor and crude oil prices," said Prof Stephen Glaister, director of the RAC Foundation.

"About 60% of the pump price is accounted for by fuel duty and VAT and we would now call on retailers to provide a breakdown on till receipts to show exactly what the proportion the Exchequer is creaming off."

"Some will find it hard to believe, but the report does make clear that the fuel market is helping keep prices lower and supermarkets have actually helped competition."

Quentin Willson, spokesman for the pressure group FairFuelUK, said he was shocked.

"Every motorist and business in Britain instinctively knows that 'something's not right'," he said.

"The OFT appears to have failed to address the key issues of : why diesel is more expensive than unleaded in the UK when this is not the case in Europe, why falls in the oil price take so long to be reflected at the pump, and why there are such variations in price, often from the same branded forecourts, within the same area."

The report was welcomed by Chris Hunt, director general of the UK's Petroleum Industry Association, which represents refiners.

"The UK has had amongst the lowest pre-tax pump prices in the EU for over a decade so the findings come as no surprise," he said.


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  • rate this

    Comment number 716.

    Advice to Mr Wilson.
    1. Untaxed - diesel is more expensive than petrol. Diesel is more expensive in the UK because both fuels are taxed at the same rate.
    2. High volume sellers like supermarkets have low unit costs which allows them to operate with low margins. Small volume sellers can't so hang on to higher margins as long as they can.
    3. Branding does not necessarily reflect ownership.

  • rate this

    Comment number 715.

    Who are the OFT working for? Big business? In Greater Manchester they've just told Stagecoach that they have to sell their Wigan Depot, even though this increases competition (First used to have a monopoly on the entirety of North Manchester). Now they say the fuel market is working. These are the civil servants that Cameron should sack to make 'efficiencies'.

  • rate this

    Comment number 714.

    "Europe's cheapest before tax". 'Nuff said. Should have known the OFT would be toothless and come down on the side the government. Now, who do we get to investigate the ridiculous amounts of duty and tax on an everyday necessity?

  • rate this

    Comment number 713.

    People you're missing the point the TAX has no effect on how competitive the market is or how it operates, the facts as far as I can tell are that there is a cosy cartel at large and prices are sticky high compared with with the wholesale price of crude.

    The price of a litre of petrol in Saudi at the moment is 6p and the smiling seller will shower you with gifts to come back and buy some more.

  • rate this

    Comment number 712.

    The fuel market, at least in petrol/diesel, is working just fine. It might be a couple of pence out (at most), but generally it follows oil price trends pretty well. It is tax that is completely out of hand, the government has to cut it if it wants to find growth.

  • rate this

    Comment number 711.

    In answer to 404 "if this really is working why is it the small company owned petrol stations are all closing down, yet there are more cars on the uk's roads today?", "Working" in this case means people are getting cheaper fuel & petrol stations are not making a profit. This will price the small operators out. Markets are supposed to kill small operations and encourage economies of scale.

  • rate this

    Comment number 710.

    It's clearly the tax. I find it ridiculous than the gov't has come out previously criticising the oil companies when most of the cost is pure tax. In fact back in 2002 I remember being at University and paying 68.9p a litre. Obviously it's been 11 years so inflation will take its toll but the point is that the tax ALONE is higher than the entire cost in 2002. Makes you think...

  • rate this

    Comment number 709.

    The UK leads the way on fuel/Carbon taxation. It's exactly the same with your energy bills at home, taxation is the main cause for their dramatic rise over the past 10 years. CRC, CCL, EUETS, ROC's, fossil fuel levy, hydro charges, FIT etc. We have the 2nd highest diesel and 3rd highest petrol prices in europe. http://www.drive-alive.co.uk/fuel_prices_europe.html

  • rate this

    Comment number 708.

    But of course the U.K. petrol market is working well .... At least from the tax collectors point of view it is . All that luvlee lolly to be squeezed out of the public to spend on some pretty questionable schemes . Frankly I'm surprised the goverment haven't put it up at least doudle !
    Seriously though , the price we're paying at the pumps is scandelous .

  • rate this

    Comment number 707.

    This is a small country with a huge population and very very busy roads. So fuel is one way to control the amount of cars on the roads.

    This all sounds fair enough, but sadly public transport costs are also high. So it's not as if you pay for the luxury of using a car. A trip that can cost £40 in a car can be £300 on a train.

  • rate this

    Comment number 706.

    All some people think about is urban transport, but a car is essential to many. This is about fair consumer pricing. There is no correlation between production cost when compared to price at the pumps. The difference can only be justified by MASSIVE PROFITS. Prices never drop in direct correlation with production costs. OFT must have been nobbled. Oil companies make record profits.

  • rate this

    Comment number 705.

    @ 450 - doesn't seem to have done you much good, does it? Another London centric comment.

  • rate this

    Comment number 704.

    The OFT is a government office, therefore what can we expect?! The govt want the tax, therefore they will lean heavily on any one who investigates high prices on fuel or anything taxable to get this kind of report.

  • rate this

    Comment number 703.

    To Prophantiti

    Petroleum makers figured out everyone was buying deisel cars.. Deisel takes one less cracking procedure to make so therefore should be a hell of a lot cheaper..
    Currently, aviation fuel, which is a lot harder to manufacture is going for $3.14 a gallon.. In the UK its cheaper to fly than drive Fuel-Wise lol

  • rate this

    Comment number 702.

    Yes, it's due to the refining capacity or diesel. Our refineries were primarily designed to produce petrol and it's only in recent years that diesel has been required in significantly greater volumes ... thereafter it's a supply and demand issue.

  • rate this

    Comment number 701.

    I would love to be able to ditch the car but sadly I was made redundant and the job I landed ter 26 interviews meant travelling to work. There is no viable alternative to driving, public transport is expensive takes double the time and doesn't run at the times I need it to. Perhaps those who would like to see me ditch the car and get more fresh air would prefer it if I'd remained unemployed?

  • rate this

    Comment number 700.

    My question is how many more brainless stupid laws is this Coalition Government going to inflict on the public before May 2015?

    As for our so called Watch Dogs, what complete and utter failures in protecting the consumer from being ripped off.

    Do they ever actually achieve anything for the consumer?

  • rate this

    Comment number 699.

    Re Lewis Canon, your comment is spot on!

    I can still remember my father listening to the budget on the wireless in the 1950s. At the time I was a small boy. To my considerable amazement my father, who was not a swearing man, swore!

    "The b***ers have put petrol up!" he said. As we did not own a car I was puzzled.

    Father explained, "When they put petrol up they put EVERYTHING up."

  • rate this

    Comment number 698.

    The USA has fuel which is considerably cheaper than ours and a much stronger economy than the UK"

    You might notice that there are much longer driving distances in the USA, the fact that they do not provide things like universal healthcare funded by taxes nor fund the system of state pensions and other benefits to the community. If you want these they need to be funded somehow.

  • rate this

    Comment number 697.

    Another load of rubbish.
    Who do they think they are kidding.
    Does the OFT think the public are as stupid as they are.
    Waste of taxpayers money.


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