5 Sep 2012

OFT launches probe into pump prices

The motor industry, motoring groups and consumer bodies are being urged to provide information for an investigation into the price of petrol and diesel by the Office of Fair Trading.

A man fills his truck with diesel (Reuters)

The trade watchdog has issued a “call for information” as it looks to see whether reductions in the price of crude oil are being passed on to motorists.

Petrol prices rose by 38 per cent from £0.97 per litre to £1.34 between June 2007 and June 2012 and diesel prices by 43 per cent over the same period.

Amid continuing public concern about pump prices, the OFT wants to identify whether or not there are competition problems that it can tackle in the sector. The OFT will explore a number of claims about how the road fuels sector in the UK is functioning.

The investigation will examine whether reductions in the price of crude oil are being reflected in falling pump price, whether supermarkets’ and major oil companies’ practices may be making it more difficult for independent retailers to compete and whether there is a lack of competition between fuel retailers in some remote communities in the UK.

‘Widespread concern’

Claire Hart, a director at the OFT, said: ‘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.

“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.”

The OFT said it will be gathering information over the next six weeks, and plans to publish its findings in January 2013.

The OFT began to look at the issue in February when it received a submission from the Retail Motor Industry (RMI), which raised concerns about the ability of independent fuel retailers to continue to compete in the market.

Issues raised by the RMI, a trade body which represents car dealers, independent garages and petrol retailers, included low and below-cost pricing of road fuels by the big four supermarkets.

The RMI was also concerned that major oil companies involved in road fuel retailing through company-owned sites were selling fuel at prices close to the wholesale prices they charge to independents.

Forecourt decline

According to the RAC Foundation there has been a rapid decline in the number of petrol stations and the organisation has questioned what this means for fuel supply and price. In 1990 there were some 18,000 forecourts. Now there are fewer than 9,000.

Fuel price campaigners FairFuelUK welcomed the move.

Quentin Willson, former Top Gear presenter and FairFuelUK campaigner, said: “There is a widespread feeling that when oil goes up, pump prices rocket immediately – but when the oil price falls, pump prices don’t reflect that fall. This causes a sense of complete exasperation and anger.”

A Department for Transport spokesman said: “Many motorists are concerned about fuel prices and that when crude oil prices fall, this isn’t seen at the pump as quickly as consumers would like.

“We look forward with interest to the findings of the study.”