Watchdog dismisses competition complaints over fuel prices

Campaigners wanting to bring down the price of fuel in Bath have been left disappointed by an official report that dismisses lack of competition as a factor.

The Office of Fair Trading today gave its verdict on the cost of filling up a tank after criticism from motoring organisation that there was not enough competition.

The OFT concluded that competition was working well and the UK had some of the cheapest prices in Europe, with rises blamed on the cost of crude oil.

In Bath a price of petrol varies from 132.9 pence per litre (ppl) to 134.9 ppl and diesel from 139.9 ppl to 141.9 ppl.

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In the ten years between 2003 and 2012 pump prices have increased on average nationally from 76ppl to 136ppl for petrol, and from 78ppl to 142ppl for diesel.

This rise has been blamed on an increase of nearly 24ppl in tax and duty, and 33ppl in the cost of crude oil.

The OFT said pump prices tend to be more expensive in rural areas compared to urban, and also at motorway service stations.

The OFT also investigated the widely held perception that pump prices rise quickly when the wholesale price goes up but fall more slowly when it drops, but found limited evidence to support such claims.

Chief executive of the OFT, 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.”

Motorist Adam Powell, who works as a university manager in Bath, responded to the OFT last year.

In his submission to the OFT, he pointed to the price difference between the same retailer in different towns and cities. For example in September 2012, diesel at Sainsbury’s in Bath was 143.9ppl, but at Sainsbury’s in Winterstoke Bristol it was 140.9ppl.

He said: “I was disappointed to read that industry pricing was working well, particularly as the report clearly indicated that differences in fuel prices do exist between neighbouring towns. The fact that this was largely put down to the number of supermarkets in the area isn't particularly helpful - Bath doesn't need more supermarkets but it could do with more competition.”

Conservatives locally had also raised the issue of the disparity between prices in Bath and surrounding towns and cities.

The AA said it was not surprised by the findings and called for the wholesale price of petrol and diesel to be published.

The AA’s president, Edmund King, said: “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.”