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UK petrol prices are competitive, rules OFT

There is no sign of relief for motorists facing ever higher fuel bills, after a new investigation revealed no evidence of anti-competitive trading in the petrol industry.

Fuel prices in the UK have soared over the last ten years as largely as a result of rising Filling up the car isn't going to get cheapercrude oil prices and increased tax and duty-not as the result of any wrongdoing within the industry-according to a new report from the Office of Fair Trading (OFT).

That’s bad news for anyone who thought the OFT investigation might lead to a better deal for motorists when it comes to the price at the petrol pump.

OFT found that competition at a national level  is ‘working well’ within the industry, with one small exception; the absence of pricing information on motorways means that drivers often don’t know what they’ll pay at service stations until they’ve left the motorway.

In August 2012, for example, prices were on average 7.5ppl higher for petrol and 8.3ppl higher for diesel at motorway services than at other UK forecourts.

Click here for full infographicIn response, OFT is requesting that the Department for Transport (DfT)  introduce new signs on motorways to display prices.

But overall, the OFT found that the £47bn market is currently providing the UK with some of cheapest road fuel prices in Europe, pre-tax that is.

In the 10 years between 2003 and 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.

Supermarket influence

A key feature of the road fuels sector over the past decade has been the growing influence of the big four supermarkets. They increased their share of road fuel sold in the UK from 29 per cent in 2004 to 39 per cent in 2012. The supermarkets' high Petrol pump throughput per forecourt and greater buying power has allowed them to sell fuel more cheaply than other competitors. In August 2012, for example, the average price of petrol at supermarkets was 2ppl cheaper than the average at oil company owned sites and 4.3ppl cheaper than the average charged by independent dealers.

Independent dealers have found it difficult to compete in this sector, with a significant number exiting the market. Overall, the number of UK forecourts has fallen from 10,867 in 2004 to 8,677 in 2012, although the rate of decline appears to have slowed in the last three years.

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 over the past decade or so have largely been down to increases in tax and the cost of crude oil.”

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Faye Sunderland

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