The Petrol Retailers Association has predicted that petrol prices could rise by as much as 4p per litre at the pumps in a matter of days. The rise in prices comes as a result of increased wholesale costs for forecourts which will in turn be passed on to the public.
According to the association, wholesale prices have increased by 5p per litre since Christmas. Brian Madderson, chairman of the PRA has commented: “Independent retailers have been soaking up this increase at the expense of already tight margins because they know how hard the motorist is squeezed. But the floodgates will have to open soon.”
The PRA’s most recent figures indicate that current prices are 132.83p per litre for petrol and 140.4p per litre for diesel, with an estimated rise of up to 4p per litre ‘in coming days.’
Despite these concerns, a study published today by the Office of Fair Trading has reported that competition is ‘working well’ in the UK road fuel sector and that the UK’s fuel prices are among the lowest in Europe before tax.
The AA has previously argued that the fuel industry has not passed on previous decreases in wholesale prices to the consumer as rapidly as increases, describing petrol prices as ‘going up like a rocket and coming down like a feather.’
“Another new year, another new round of pump price rises after the industry failed to pass on fully wholesale price savings,” AA president Edmund King has previously commented. “The insight we are now getting on wholesale price movements rams home the need for this information to be out in the public domain immediately. Wholesale petrol prices turned upward in the first week of January, average pump prices six days later. If falls in wholesale were reflected as quickly, no one would mind – but they’re not.”
The OFT’s report suggests, however, that there is ‘very limited evidence’ to support the AA’s claims after analysing the relationship between retail and wholesale prices at local and national level.
“We recognise that there has been widespread mistrust in how this market is operating,” said OFT chief executive Clive Maxwell. “However, our analysis suggests that competition is working well, and rises in pump prices over the past decade or so have largely been down to increases in tax and the cost of crude oil. Our call for information has not identified any evidence of anti-competitive behaviour in the fuel market at a national level, where competition appears to be strong.”
Like the PRA, the AA has forecasted an increase in fuel prices at the pump in the near future although they predict a smaller rise of 2.5p.
Between June 2007 and June 2012, petrol prices have risen by 38% and diesel by 43%.
The Office of Fair Trading’s report can be viewed here.
