Formal inquiry tries to ease motorist pain at the pumps

Laura Kuenssberg

Former Business Editor

The Office of Fair Trading is launching an inquiry into petrol prices. Credit: Press Association

After a long campaign the Office of Fair Trading has delighted some by asking for evidence to see if consumers are being ripped off by petrol companies. The main accusation, that when the wholesale price of oil falls, the drop is not fully passed on to punters at the pump. But the OFT will also consider whether small independent petrol retailers are being squeezed out by the big boys, including supermarkets who have recently given deep discounts.

Laura Kuenssberg reports:

One of the problems is that the international oil market is enormously complex, and frankly a bit murky. It is not an easy job to work out exactly how much the big companies are having to pay for oil and when. But, once you start to look for evidence there is some available. In April for example, the European wholesale petrol price dropped two hundred dollars a tonne. The AA calculates that should have taken 10 pence a litre off the price. But on forecourts up and down the country the price only went down by about 7p.

The government though has already asked the industry to find ways of publishing a tracker on the wholesale price so that it is much easier for consumers to compare what the retailers are having to pay with what they fork out at the pump. The Office of Fair Trading does have considerable powers to intervene in the market, forcing companies to change their behaviour by law or imposing big fines. They are expected to report by Christmas. But a proper and transparent system where members of the public are actually able to see what it costs the retailers could also go a long way to reducing pain at the pump.