Friday, July 6, 2012
Oil firms must take responsibility for petrol prices
Yesterday I wrote an article for "The House" magazine, about petrol prices, and why international oil firms must take responsibility.
You can read my article below.
First of all, the government has stepped up to the plate on petrol prices: stopping the 3p August rise, scrapping the January rise, and cutting fuel duty by -1p in 2011. Taken as a whole, this is a radical tax-cutting agenda, targeted in a way to help the poor. It shows that this Government is on the side of strivers – supporting aspiration, and hard work – especially as it comes against the backdrop of an economic crisis.
Ministers have done not so much a U-turn as an L-turn. They have listened to the Parliamentary campaign, to petitions such as the one at www.PetrolPromise.com, to the views of many colleagues, and particularly to what is perhaps the most effective campaigning pressure group in the country, FairFuelUK.
The question is: What next? The government has taken responsibility, but major oil firms have conspicuously failed to do so. Petrol prices are high – not just because of tax, but because of the UK oil market as well. Look at the facts. Fuel is still at around £1.30 a litre. The UK has the tenth highest petrol price in Europe and the second highest diesel price.
There is also disturbing evidence of uncompetitiveness in the oil market. Pump prices are quick to rise, but it feels like you need a court order to get them down. From May to August last year, oil prices fell by 5.5% (adjusting for exchange rates). But petrol and diesel stayed stubbornly high, falling by just 1.5 per cent.
There is also the thorny problem of local variation in petrol prices – especially in rural areas, but also in towns like Harlow. Harlow residents often write to me, saying that fuel is 5p cheaper in nearby towns like Epping, Hoddesdon, Welwyn, and Stevenage. There is simply no explanation for it, other than a lack of competitiveness.
So what are the Office of Fair Trading doing about this? Disappointingly, the OFT have indicated that they will not investigate the UK oil market, despite not having done so since 1998, and despite a dossier of evidence from Brian Madderson and the Retail Motor Industry association showing that British motorists are being fleeced.
That is why, together with 65 MPs of all parties, I am asking the Backbench Business Committee for a debate, with a vote insisting that the OFT investigate. A vote in the House is crucial, as the OFT is independent, and cannot be instructed by Ministers.
Britain is lagging behind the curve on this. Many other G20 countries are taking regulatory action. Germany is introducing fuel price regulation– to limit price-rises, and to stop excessive variation from one town to the next. Austria implemented theirs last year. America is bringing in tough penalties for oil traders, if they are convicted of “market-manipulation”. These are all things Britain could do as well. If other forward-looking G20 nations are clamping down on uncompetitive behaviour, so should we.