The Office of Fair Trading (OFT) has concluded that the rise in fuel prices is due to increasing costs of crude oil and higher tax rates, rather than a lack of competition, according to a report published today.
An investigation was launched in September last year to uncover whether supermarkets and large oil companies were monopolising the market, making it more difficult for smaller, independent retailers to compete.
The OFT announced in its report that competition ‘is working well’ at a national level, and that there was little evidence to suggest fuel prices rise quickly and fall slowly. It found that UK fuel prices are among the cheapest in Europe, before tax.
Other concerns included the difference in pump prices between neighbouring towns, and the difference in cost between urban and rural areas. The report found that fuel is often cheaper in local areas, particularly those with supermarket forecourts, and that prices are marginally higher in rural parts of the country, due to the necessary transport costs to deliver it.
Further evidence gathered by the OFT found that petrol and diesel is often ‘significantly’ more expensive at motorway service stations, and raised concerns that fuel prices are not clearly signposted. The price of diesel was reported to cost an average of 8.3 pence per litre more than at other UK forecourts.
Clive Maxwell, OFT Chief Executive 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 have largely been down to increases in tax and the cost of crude oil.’