/ Money, Motoring

Do the OFT’s petrol price findings spark your ignition?

A petrol nozzle filling up a car

So the Office of Fair Trading thinks that the market for petrol and diesel in the UK is ‘working well’. Do the OFT’s findings mirror your experience of filling up your car?

According to its new report, the OFT concludes that very little action is required to change the way the current UK fuel market works.

Independent forecourts might disagree. They’ve been in decline for years, with more shutting every month, and it was complaints by independent retailers about oil companies and supermarkets gaining an unfair advantage that led to this OFT report.

Is the UK the best in Europe?

However, after a four-month investigation, the regulator has found no evidence of market manipulation, concluding that ‘at a national level, competition is working well in the UK road fuel sector’.

Before tax, the OFT says that fuel prices in the UK are among the lowest in Europe. Its analysis suggests that pump price rises over the last decade or so have largely been down to increases in tax and the cost of crude oil.

It also says that forecourt prices don’t appear to rise unduly quickly when crude oil prices peak, and nor do they take too long to fall back when crude costs tumble.

Motorway pricing info needed

However, one problem area that the OFT has identified is motorway service stations. As most of us are all too well aware, motorway service areas have significantly higher fuel prices than other outlets. For instance, the OFT found in August 2012 that prices were on average 7.5p per litre higher for petrol and 8.3p more for diesel than regular forecourts.

In this case, the OFT’s concerns centre on motorists being unable to see these prices until after they’ve left the motorway. So it’s asked the Department for Transport to introduce new motorway road signs to display prices.

So what’s your experience of UK forecourts? Would you welcome more information about pricing before turning off the motorway?

Comments
Member

I wonder which market for petrol and diesel the OFT actually looked at. When the oil price rises, prices at the pumps seem to rise regardless of the cost of the stuff in the underground storage tanks which was probably bought at a lower price. Surely you should expect any price rise to come in force after the garage has taken delivery of a new load (at the new price).

Member

The big problem with petrol retailing is the dearth of filling stations in rural areas. Trunk roads seem to have them every ten miles or so but non-trunk A roads seem to have 15 mile gaps between stations [and they’re usually on one side of the road only], and minor roads have lost them altogether. A lengthy return journey in East Anglia requires quite a bit of planning and knowledge, otherwise you have to top up where you can at whatever price prevails.

I’m not sure about the DfT putting up fuel price signs on Motorways in advance of service stations unless they also give the prices for the following one [and what about where Motorways diverge?] Unless the DfT signs are updated automatically through a link to the service station I can see things going wrong and drivers getting false information. In general I am opposed to more signs on our Motorways and especially signs with illuminated graphics – they would have to be at least as big as the huge cantilevered variable message signs that have appeared over the last few years otherwise they would not be readable at cruising speed and could lead to sudden decelerations or lane changes. No doubt the DfT will kick this idea down the embankment where it belongs.

Member

The problem is not with the price of a litre of fuel per say it is the 80p per litre tax that is added. How can it possibly be right for tax to more than double the price we pay? To even investigate fuel wholesalers and retailers is a complete smokescreen the real villain is the tax man or more precisely the Government muppet who decides the level of fuel tax. Investigate them.

Member

There is something of a parallel discussion on this topic going on at https://conversation.which.co.uk/transport-travel/fuel-petrol-prices-apps-petrolprices-pro-fuel-smart/#comments. Perhaps the two should merge?

Member

Hi Malcolm, that Convo is about smartphone fuel apps – if you’d like to talk about the OFT report please do so here. We don’t merge Conversations – that’s up to you 🙂

Member

Understood Patrick.
The latest OFT report says there is fair competition in fuel pricing. But they also obscure the issue by talking about pre-tax and pre-duty prices being cheaper than in parts of Europe – which is irrelevant to the UK competition issue. Tax is a separate issue – here the OFT should be concerned with the basic product cost and how it is passed on.
Many challenge their findings – I don’t know if they published a graph showing how retail price changes follow wholesale price changes but that would help deal with the view that prices rise quickly but fall slowly.

However, since many of us can buy fuel from a number of outlets – including supermarkets – if we feel strongly enough that certain suppliers are not being fair then we can vote with out feet (or wheels) and boycott them. I suspect if enough did so we would see a change in attitude. But would enough bother to do that? Could Which help by collating information on lower-priced outlets through something like Which Local for example with information supplied from members?

Member

Where there is a choice of outlets I suspect there is a reasonable amount of price competition. For many of us, however, there is often only one petrol station on the regular route and making a detour to save a few decimal points per litre cancels out the savings. I have noticed that the greater the distance from an alternative supplier the higher the fuel price tends to be.

I think there are websites that show the prices at filling stations by postcode or district. I haven’t looked at them myself so cannot say how accurate or reliable they are, or indeed whether they indicate any effective competition through worthwhile price differences.

Member

The less signs to distract motorists on motorways the better, though this would be better than having drivers playing with apps on their phones to check prices.

I assume that operators of motorway service areas operate under some rules, since they all provide free toilets and parking. Perhaps this could be extended to fix fuel prices at service areas across the country.

Member

I believe there are quite a lot of rules and restrictions applying to Motorway service stations, including a requirement to provide a supply of all grades of road fuel all round the clock, to provide somewhere people can wash and refresh themselves, and where they can rest outside the vehicle.