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FPB welcomes OFT's six-week inquiry into fuel prices

05 September, 2012

The Forum of Private Business has welcomed an inquiry by the Office of Fair Trading into fuel pricing. The OFT said this week it would conduct a six-week long investigation into how oil companies set prices, and also at how filling stations, particularly those owned by the supermarkets, set their prices.

Since 2007 fuel prices have risen dramatically above the rate of inflation, diesel spiking at nearly £1.50 earlier this year, and according to the Forum, this has significantly driven up the cost of doing business for many small firms.

“Every motorist knows it – when crude oil prices go up, forecourt prices quickly follow suit. But when they come down again pump prices are slow to do the same,” said the Forum’s policy advisor Robert Downes.

“We only have to cast our mind back to June to see when this last happened. It means SMEs – already reeling from one of the worst recessions on record – are having to pay out more of their hard-earned cash. In a fairer world that wouldn’t happen.

“Hopefully this OFT investigation will lift the lid on who is really to blame for this kind of trickery. Is it the petrol stations, is it the suppliers, or both? The facts are there is real concern among businesses that they are being squeezed unfairly, and frankly this investigation is way overdue.”

The OFT has said they will publish the results of the study in January – which is when August’s postponed 3ppl duty rise will take effect. The watchdog will at the same time, also reveal their findings on anti-competitive supermarket pricing strategies; and if rural fillings stations offer a fair price.

Downes added: “Compared to 10 years ago, the number of filling stations in the UK has more than halved. There’s plenty of anecdotal evidence to suggest that this decline ties in with the supermarkets’ push into the sector, with a new forecourt for every out-of-town shopping centre thrown up.

“We think it’s highly likely the OFT will find supermarkets have reduced competition and continue to make it very difficult for small independents who can’t tie in their fuel prices with money-off coupons and other grocery shopping incentives.

He added: “What use these findings are now though is unclear, and seems to be a case of locking the stable door after the horse has bolted.

“We just hope that the OFT will eventually conclude a fuel tax stabiliser is the only logical way to take the sting out of high fuel prices, particularly small businesses where fuel costs make up a large portion of their overheads.

“The Department for Transport has also previously suggested the oil industry as a whole should come up with a voluntary code of conduct to ensure wholesale price falls were passed on within a fortnight to the motorist, and we hope the OFT research endorses this idea as well.”