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Forum welcomes OFT’s fuel price investigation

The Forum of Private Business has welcomed an inquiry by the Office of Fair Trading (OFT) into fuel pricing.

The OFT said this week it will conduct a six-week-long investigation into how oil companies set prices and how filling stations, particularly those owned by the supermarkets, set their prices.

Since 2007 fuel prices have risen dramatically above the rate of inflation, with diesel spiking at nearly £1.50 a litre earlier this year. This, says the Forum, has significantly driven up the cost of doing business for most small firms.

"Every motorist knows that, when crude oil prices go up, forecourt prices quickly follow suit. But, when they come down again, pump prices are slow to do the same," said the Forum's Policy Advisor Robert Downes.

"We only have to cast our minds back to June to see when this last happened and it means that SMEs already reeling from one of the worst recessions on record are having to pay out yet more of their hard earned cash. In a fairer world, that wouldn't happen.

"Hopefully this OFT investigation will lift the lid on who is really to blame for this kind of trickery. Is it the petrol stations? Is it the suppliers? Or both? The fact is that there is real concern among businesses that they are being squeezed unfairly and frankly this investigation is way overdue."

The OFT has said it will publish the results of the study in January 2013 – which is when the 3p a litre duty rise, postponed from August, will take effect. The watchdog will also reveal at the same time its findings on anti-competitive supermarket pricing strategies and whether rural fillings stations offer a fair price.

Added Downes: "Compared to 10 years ago, the number of filling stations in the UK has more than halved. There's plenty of anecdotal evidence to suggest that this decline ties in with the supermarkets' push into the sector, with a new forecourt for every out-of-town shopping centre thrown up.

"We think it's highly likely that the OFT will find supermarkets have reduced competition and continue to make it very difficult for small independents who can't tie in their fuel prices with money-off coupons and other grocery shopping incentives."

He added: "What use these findings are now, though, is unclear and seems to be a case of locking the stable door after the horse has bolted.

"We just hope the OFT will eventually conclude that a fuel tax stabiliser is the only logical way to take the sting out of high fuel prices, particularly for small businesses for whom fuel costs make up a large portion of their overheads.

"The Department for Transport has also previously suggested that the oil industry as a whole should come up with a voluntary code of conduct to ensure wholesale price falls are passed on within a fortnight to the motorist and we hope the OFT research endorses this idea as well."

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