MP: 'Rural fuel prices are not sustainable'
Rural motorists were left with little hope of reduced fuel bills yesterday after an official report found pump prices were 2p-a-litre more expensive in the countryside but concluded the market was "working well".
The Office of Fair Trading, which investigated whether there were competition problems in the sector, said rises in pump prices over the past decade were largely due to increases in tax and the cost of crude oil.
It reported "very limited evidence" that pump prices were quickly hiked by retailers when the wholesale price rose but fell more slowly when it dropped and ruled out further investigation.
The OFT recognised competition in rural areas like the Westcountry was weaker and found petrol was around 1.9 pence per litre more expensive and diesel around 1.7ppl more expensive in rural areas than in urban areas.
Business Cards From Only £10.95 Delivered www.myprint-247.co.ukView details
Our heavyweight cards have FREE UV silk coating, FREE next day delivery & VAT included. Choose from 1000's of pre-designed templates or upload your own artwork. Orders dispatched within 24hrs.
Terms: Visit our site for more products: Business Cards, Compliment Slips, Letterheads, Leaflets, Postcards, Posters & much more. All items are free next day delivery. www.myprint-247.co.uk
Contact: 01858 468192
Valid until: Sunday, May 26 2013
A number of factors were to blame, according to its report, including fewer competitors, higher transport costs for getting fuel to rural forecourts and lower throughputs.
But its conclusions, that the market was operating properly, were of little comfort to hard-pressed drivers in rural Devon and Cornwall where public transport is sparse and vehicle ownership is regarded as a necessity.
St Ives Lib Dem MP Andrew George said the Government had asked the OFT to investigate the "wrong question".
"I think we as a Parliament need to be asking a different question," Mr George said. "Are these fuel prices sustainable even if these retailers are behaving properly? The answer to that is no."
The TaxPayers' Alliance said the report confirmed that the real issue with the price of fuel, including in the countryside, was high fuel duty.
"For people living in rural communities having a car is not a luxury it is an absolute necessity for people to go work, get their children to school or do the shopping," an alliance spokesman said.
"If the Government wants to help people who are struggling to meet those costs the easiest way would be to reduce fuel duty."
The OFT launched a call for information on the fuel sector in September last year to determine whether there were competition problems that need to be addressed before investigating concerns over the prices charged for petrol and diesel at the pumps.
It highlighted how the UK had some of the cheapest pre-tax road fuel prices in Europe, noting that in the ten years to 2012 pump prices increased from 76ppl to 136ppl for petrol, and from 78ppl to 142ppl for diesel, caused largely by an increase of nearly 24ppl in tax and 33ppl in the cost of oil.
But the competition watchdog's decision not to hold a full investigation into the fuel market was greeted with anger by campaigners.
RAC technical director David Bizley said: "UK consumers have seen a 38% increase in the price of petrol and a 43% increase in diesel costs between 2007 and 2012.
"The reasons behind this massive rise need to be conveyed clearly to the motoring public and justified so that households, businesses and the economy as a whole are not harmed by ever-increasing pump prices.
"It is a great shame the OFT has not taken this opportunity to instigate a full investigation into this issue which many motorists view as daylight robbery."