Thursday 6 September 2012 8:17 pm
Is the Office of Fair Trading’s investigation into fuel prices a positive move for drivers?
YES David Bizley Anything that brings transparency to fuel pricing is very welcome. Most motorists are very aware that fuel prices go up far faster than they ever come down, so it is a very positive move that the Office for Fair Trading (OFT) is seeking to clarify the situation once and for all. Fuel prices have gone up by 40 per cent over the last five years, way above the rate of inflation. This has caused economic hardship for millions, particularly those living in rural areas. It has also hindered the growth of the economy. So this really is news that motorists would like to have had a long time ago. As a supporter of the FairFuelUK Campaign the RAC has been lobbying the government to reduce the amount of duty charged on fuel. We believe a reduction in duty would stimulate growth and actually generate more income for the government. David Bizley is technical director of the RAC.
The Office for Fair Trading (OFT) says it is looking into why petrol and diesel are so expensive, whether there are “competition problems that it can tackle in the sector”. Unfortunately, its remit doesn’t extend to the biggest monopolist of them all – the government. Around 60 per cent of the price of petrol and diesel is tax. Similarly, there also isn’t a lot that the OFT can do about Opec, as its capacity for military intervention in the Middle East is limited. It will also struggle to persuade countries like China and Iran to stop subsidising consumption, which is driving up demand. The planned 2013 hike in fuel taxes is larger than the entire retail margin for fuel – which was was about two pence per litre in January 2010 according to Experian Catalist. Even if the UK market is imperfect, it is a sideshow. If motorists want lower fuel prices, there is only one serious game in town: lower tax.
Matthew Sinclair is chief executive of the TaxPayers’ Alliance.
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