Anger as fuel price probe ruled out

Campaigners say they are "bitterly disappointed" that the competition watchdog has ruled out a full investigation into the fuel market after concluding high prices are the fault of taxes and the cost of crude oil.

The Office of Fair Trading (OFT) said competition in the sector was "working well" and there was "very limited evidence" that pump prices rise quickly when the wholesale price goes up but fall more slowly when it drops.

Furious campaigners, who had called on the OFT to announce a full investigation into the sector, said drivers would feel let down by the findings.

FairFuelUK spokesman Quentin Willson 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?"

RAC technical director David Bizley said: "We're extremely disappointed to hear the OFT will not be launching a full-scale review of petrol and diesel pricing in the UK. We have campaigned long and hard for greater price transparency and will continue to do so until this is recognised as a serious issue.

"UK consumers have seen a 38% increase in the price of petrol and a 43% increase in diesel costs between 2007 and 2012. The reasons behind this massive rise need to be conveyed clearly to the motoring public and justified so that households, businesses and the economy as a whole are not harmed by ever-increasing pump prices.

"It is a great shame the OFT has not taken this opportunity to instigate a full investigation into this issue which many motorists view as daylight robbery. Our members want to see fairness and transparency and the authorities and industry bodies have an obligation to deliver this. We strongly urge the OFT to reconsider the decision."

AA president Edmund King said: "The OFT sees the fuel pricing market as competitive but this clashes with drivers' frustration on the forecourts. If fuel pricing is fair and competitive, there is no reason not to publish petrol and diesel wholesale prices to prove the point and reassure motorists.

"Since 2005, we have campaigned for the wholesale price to be made transparent so that drivers can see whether pump price movements are a fair reflection of costs. We continue to hold that view and will push hard for that to happen.

"The OFT are not ruling out action at local level and its call for motorway fuel price signs could bring more competition. But drivers deserve a better explanation of why prices fluctuate wildly and who is driving this - from the pump back to the well."

The OFT's report found that the UK had some of the cheapest pre-tax road fuel prices in Europe, noting that in the 10 years to 2012 pump prices increased from 76 pence per litre (ppl) to 136ppl for petrol, and from 78ppl to 142ppl for diesel, caused largely by an increase of nearly 24ppl in tax and duty and 33ppl in the cost of crude oil.

Its analysis of the relationship between retail and wholesale prices at both a national and local market level, as well as the relationship between crude oil prices and wholesale prices at a national level, turned up "very limited evidence" to support claims of so-called rocket and feather pricing.

However the investigation did identify a lack of pricing information on motorways as a concern and the watchdog said it would not rule out taking action in some local markets if there was "persuasive evidence of anti-competitive behaviour".

The OFT launched a call for information on the UK road fuel sector in September last year to determine whether there were competition problems that need to be addressed before investigating concerns over the prices charged for petrol and diesel at the pumps.

OFT chief executive Clive Maxwell said: "We recognise that there has been widespread mistrust in how this market is operating. However, our analysis suggests that competition is working well, and rises in pump prices over the past decade or so have largely been down to increases in tax and the cost of crude oil.

"Our call for information has not identified any evidence of anti-competitive behaviour in the fuel market at a national level, where competition appears to be strong. There may be some issues at a local level. Where we receive evidence of potential anti-competitive behaviour we will consider taking action. For example, we have recently opened an investigation into the supply of road fuel in the Western Isles of Scotland."