Member Article

Fuel competition is fair say OFT

National competition between UK petrol providers is “working well,” say the Office of Fair Trading.

The OFT’s report into competition in the road fuel sector suggested national level competition was working, but said it would not rule out taking action in some local markets if there is “persuasive evidence” of anti-competitive behaviour.

Clive Maxwell, OFT chief executive, said it was recognised there was “widespread mistrust” in how the market operates, but suggested rises in pump prices over the past decade were largely down to increases in tax and the cost of crude oil.

The report looked into concerns around differences in pump prices between neighbouring towns; differences between urban and rural areas; independent dealers’ ability to compete fairly in the market; and the perception of rocket and feather pricing, where prices rise quickly when the wholesale price goes up but falls more slowly when it drops.

According to the OFT, the number of UK forecourts has fallen from 10,867 in 2004 to 8,677 in 2012.

It was recognised that many independent dealers had exited the market, but the OFT maintained that retail competition appeared to be strong in the majority of areas where forecourts closed.

Several motoring campaigning groups have dismissed the findings of the investigation.

Quentin Willson of FairFuelUK said: “UK consumers will be bitterly disappointed The nation will feel let down. Quite frankly, I’m shocked. The OFT investigated in 1998 and now have done so again.

“Every motorist and business in Britain instinctively knows that ‘something’s not right’. The Americans and the Germans are holding inquiries – why aren’t we. 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.

“They did not address the whistleblower evidence of potential ‘rigging’ of the Oil commodity market. Where is the fairness in all of this?”

Alex Jackman, head of policy at the Forum for Private Business, said: “The problem of the overall price of petrol would seem to lie squarely in the tax take, and this government, along with previous ones, continues to ignore this most pressing of issues for business. Our own research has previously shown this to be one of the biggest costs for our members.”

“The problem of the overall price of petrol would seem to lie squarely in the tax take, and this government, along with previous ones, continues to ignore this most pressing of issues for business. Our own research has previously shown this to be one of the biggest costs for our members.”

Corin Taylor, Senior Economic Adviser at the Institute of Directors, said: “The OFT is absolutely correct to identify increases in tax as a major driver behind petrol and diesel price rises in recent years. The UK has some of the lowest pre-tax fuel prices in Europe, but some of the highest after tax, making it painfully expensive for companies to move goods around our road network, and for their staff to get to work.

“The Government can do little to control crude oil prices, but with VAT and fuel duty making up 60% of prices at the pump, it does have the power to reduce the cost of fuel for hauliers, businesses and all drivers across the country.

“Transparency is vitally important. Customers should be able to see on their receipt not only the wholesale price and the mark-up the retailer is charging, but also how much tax is adding to every litre.”

Alistair Bingle is managing director of removals firm, Bishop’s Move, called for more transparency in the market.

He said: “If we were to see another fuel price increase and against the stagnate housing market, this would have had a severely negative impact on the haulage industry and a potential loss of jobs right down the ladder.

“It’s time that for the red tape to be shed and for some people to make some big decisions to ensure the UK public are no longer ripped off at the fuel pump.”

This was posted in Bdaily's Members' News section by Tom Keighley .