U.K. gasoline sellers aren’t overcharging motorists by failing to pass on declines in crude-oil prices, according to the country’s competition watchdog.
The CHART OF THE DAY shows the link between oil costs and the prices consumers pay for fuel has become closer in recent years. It shows monthly U.K. forecourt prices and Brent crude prices, in dollars per U.S. gallon, since 1992. The lower chart shows how the ratio between the two has fallen from above 18 in 1998 to 2.9 this month.
Questioning the behavior of oil companies and fuel suppliers has been common among British politicians in recent years. In 2011, Prime Minister David Cameron called for a “good competitive sector,” while last October opposition Labour leader Ed Miliband said “cozy cartels and powerful interests” were failing to pass on falls in oil prices to consumers.
“We recognize that there has been widespread mistrust in how this market is operating,” Clive Maxwell, chief executive officer of the Office of Fair Trading, said in a statement yesterday. “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.”
According to the OFT, out of the 136 pence ($2.15) a British motorist paid in 2012 for a liter of gasoline, 81 pence went in tax, 44 pence represented the crude oil price, and 11 pence was the retailer’s margin. The AA, Britain’s largest motoring organization, said the report did nothing to address a lack of price transparency and called for wholesale prices to be made publicly available alongside consumer prices.