Logistics ultimately affected by high tax put on the pump
The Office of fair trading has reported that in the last ten years the rise in petrol and diesel at the pump has mostly been affected by higher crude oil prices tax and duty amplification not an uncompetitive market.
Bizarrely the UK has some of the cheapest road fuel prices within Europe, however this is before tax.
An investigation by the Office of Fair Trading found that between 2003 and 2012 pump prices increased from 76 pence per litre 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.
The report highlighted the following specific concerns:
- The differences in pump prices between neighbouring towns
From a commercial sense the OFT noted that fuel prices were inclined to be cheaper in local areas that were situated within a greater number of local retail establishments especially if a supermarket was located nearby.
- The difference between urban and rural areas
The report found that in August 2012 Petrol was around 1.9ppl more expensive and diesel was 1.7ppl more expensive in rural areas than in urban areas. There appear to be a number of factors which account for these differences including lower throughputs per forecourt, fewer competitors ( including supermarkets) within a local area, and higher transport costs for getting fuel to rural forecourts.
- Independent dealers ability to compete fairly in the market
The OFT also examined claims that the Supermarket and major oil companies practices may be making it more difficult for independent retailers to compete with them. However the OFT has not currently received any evidence of any anti – competitive practices being used against independent dealers or breaching the law that might lead it to take enforcement action
- Rocket and Feather pricing
Reports were also conducted into the practice that pump prices rise quickly when wholesale prices go up but fall more slowly when it drops. Analysis into the relationship between retail and wholesale prices at both national and local market levels and also the relationship between crude oil prices and wholesale prices at national level but currently, little evidence was found to support the supposed.
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