Financial News

  • 30 January 2013, 11:19

OFT Fuel Price Probe Findings To Be Released

The Office of Fair Trading today releases its findings on the state of Britain's 32bn retail fuel market.

The regulator must assess whether serious competition concerns exist within the industry and make a call on whether to launch a full-blown investigation.

Brian Madderson, chairman of the Retail Motor Industry Federation's (RMI) petrol division, said: "It's not transparent at all.

"They must make a full-market study under the Competition Act so that we can see exactly how this market is working."

Motorists see prices at the pump rise rapidly when markets surge.

But there is concern that, when markets move lower, oil and gas companies are not passing on savings to retailers and motorists as quickly as they could.

This prompted the Government to call upon regulators late last year to take up the issue.

The last time the OFT conducted an enquiry into the UK retail fuel market was in 1998.

According to the RMI, the UK wholesale price of petrol has gone up by more than 7p per litre since Christmas.

Around 1.5p of that rise is because the pound has not performed well since. But the RMI says motorists have still been left to face an increase of 5.5p per litre in the space of a just a few weeks.

Asked whether fuel prices were fixed or fair, Malcolm Graham-Wood, oil analyst at VSA Capital Limited, said: "It's an efficient market working as it should do.

"What you are doing in the petrol price at the pump is seeing a reflection of what the oil price was a few months ago, in the last few months it hasn't changed very much."

Projecting how prices might perform in the year to come, he added: "I think the oil price will be relatively stable and I don't see the currency changing very much either. Accordingly, I would have thought the petrol price would be down, not up."

Any investigation that did result in changes to the current system will certainly have consequences for consumers.

But, with Britain's retail fuel market worth around 32bn, it would also have an impact on businesses and the economy as a whole.

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