OFT denies motorists being ripped off at pumps

The Office of Fair Trading (OFT) ruled out a full investigation into the fuel market after concluding high prices are the fault of taxes and the cost of crude oil.

It 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.

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

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.”

The investigation also identified 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 watchdog is continuing its investigation into the supply of fuel in the Western Isles.

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.

Scottish Liberal Democrat deputy leader Alistair Carmichael called for the Western Isles inquiry to be extended across Scotland.

The Orkney and Shetland MP said: “The fact is, many motorists in the north of Scotland buy their petrol or diesel in an environment where competition simply does not exist. I see no reason why this investigation should not be extended to cover the Northern Isles and other parts of Scotland. Drivers in my part of the world would expect no less.”

FairFuelUK spokesman Quentin Willson said key questions from motorists would remain unanswered.

He 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 has done so again. Every motorist and business in Britain instinctively knows 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.”

AA president Edmund King called for the publication of wholesale fuel prices.

He 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 is 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.”