Pump price transparency

Transport Secretary adopts AA campaign demand on fuel prices

29 May 2012

The Transport Secretary has called on fuel retailers to set up a transparency register and code of practice

The Transport Secretary has called on fuel retailers to set up a transparency register and code of practice

A seven-year fight by the AA to get a fair price at the pump takes a huge leap forward today.

The Government’s announcement calling on the industry to implement petrol and diesel price transparency will help to stop the AA’s 15 million members and other motorists ‘being taken for fuels’.

The Transport Secretary has called on fuel retailers to set up a transparency register and code of practice so that consumers can monitor the daily petrol or diesel prices.

If the industry does not respond positively to this proposal then legislation will be introduced.

The AA believes that this should result in major drops in the wholesale price of fuel being reflected more evenly across the country and more quickly at the pumps.

Fast rise, slow fall

Motorists have long suspected that global increases in oil prices are quickly reflected in the pump price whereas drops in price take much longer to filter through. The AA hopes that this Government intervention will stop motorists from being taken for an expensive ride.

Most recently, April’s $200 a tonne (worth 10p a litre) drop in the European wholesale price of petrol has still to be reflected in its entirety at the pumps. Following a record high of 142.48p a litre in mid April, the UK’s average price of petrol on Tuesday had still only fallen 7.4p to 135.08. With the UK retailing 51.5 million litres of petrol a day, UK drivers and non-fuel consumer spending are losing £1.4 million a day.

Over the past seven years we have asked governments to act against the blurred world of UK pump prices, which every driver knows shoot up like a rocket and fall like a feather

Edmund King, AA president

Comment

At last, we have a Transport Secretary who is prepared to act to win a better deal on fuel prices for consumers.

“Over the past seven years we have asked governments to act against the blurred world of UK pump prices, which every driver knows shoot up like a rocket and fall like a feather. MPs have joined the chorus of complaints against postcode lottery pricing where some towns charge up to 5p a litre more for their cheapest petrol compared to another town down the road. Yet, nothing happened,” says Edmund King, the AA’s president.

This month, the German government announced a move towards fuel price regulation. The Austrians have already implemented regulation and, even with a weaker euro, their pre-tax petrol prices remain cheaper than the UK’s.

The Danes already have a system of price reporting and transparency up and running. Clearly, patience is running out with record fuel prices across Europe and there is a will to act.

The AA supports a move towards transparency on fuel prices. However, with record prices cutting sales by 5% last year and 76% of AA members cutting back on car use, other family spending or both, regulation has to remain an option.

Fuel price transparency can also help to protect retailers and fuel suppliers from accusations of profiteering by showing that what they charge reflects fairly price movements in wholesale markets.

That has not been the case for many years:

  • In September 2005, following hurricane Katrina, fears of UK refinery blockades following a pump price surge were countered by an industry announcement that petrol prices were due to fall 4p a litre in a matter of days *. It took nearly two months for the fall to be reflected at the pumps, leading to the start of the AA’s campaign for fuel price transparency.
  • Since then there have been occasions where short-term drops in the wholesale price have failed to register at all at the pumps.
  • A 5p-a-litre fuel duty rebate for drivers in Scottish islands was swallowed by higher pump prices. Without transparency, drivers cried foul and the fuel supplier claimed it wasn’t his fault.
  • Northern Ireland’s politicians debated this month the widening gap between the cost of petrol there compared to the UK mainland.

(29 May 2012)