The fuel industry has avoided a full-blown investigation into the petrol market after the Office of Fair Trading said competition was working well at a national level.
Rises in price of petrol at the pumps were not caused by a lack of competition but by higher crude oil prices and increases in tax and duty, the OFT said on Wednesday.
But it said it did not rule out taking action in some local markets if there was “persuasive evidence of anti-competitive behaviour”. The watchdog has already opened an investigation in the Western Isles of Scotland.
Clive Maxwell, OFT chief executive, said competition across the country appeared to be “strong”.
“We recognise that there has been widespread mistrust in how this market is operating,” he said. “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.”
Campaigners had called for a full inquiry into the sector. David Bizley, RAC technical director, said he was “extremely disappointed” that the OFT was not launching a more extensive review.
“We have campaigned long and hard for greater price transparency and will continue to do so until this is recognised as a serious issue,” Mr Bizley said.
“UK consumers have seen a 38 per cent increase in the price of petrol and a 43 per cent increase in diesel costs between 2007 and 2012,” he said. “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.”
But the OFT found the UK had some of the cheapest road fuel prices in Europe. In the 10 years between 2003 and 2012 the price of petrol at the pump rose from 76p a litre to 136p, which it found was largely caused by an increase of nearly 24p in tax and duty and 33p in the cost of crude oil.
The watchdog dismissed claims that supermarkets and major oil companies were making it more difficult for independent forecourts to compete. It said although many independent dealers were shutting shop, there was no evidence of anti-competitive practices which could lead it to take enforcement action.
The OFT also rejected what it called the “widely held perception” that pump prices rise quickly when the wholesale price increases but falls more slowly when it decreases. It said it found “very limited evidence” to support such claims.