Fuel Prices

Part of Backbench Business – in the House of Commons at 2:57 pm on 13 September 2012.

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Photo of David Mowat David Mowat Conservative, Warrington South 2:57, 13 September 2012

I congratulate my hon. Friend Robert Halfon on securing this debate; he has been redoubtable on this important subject. Fuel prices are indeed regressive, and it is therefore important to look at the evidence for the issues that the OFT is to consider. I am pleased that the OFT will consider this matter, and that the previous Secretary of State for Transport asked for more transparency in the wholesale market. Markets need to be seen to be working by being transparent.

Let me return to the previous OFT review on this issue in 1998. It concluded that the market was not rigged, with the possible exception of the Scottish highlands and islands, which have particular issues about clear market share and so on. Since the 1998 report, the structure of the market has changed and oil companies have become much less dominant. The retail market is now 40% supermarkets, 30% oil companies, and 30% independent—the oil companies have left the retail market. There are seven refineries in this country—possibly now six because the one at Coryton has closed—and the oil industry, as understood in this debate, owns two of them.

Let us look at the evidence. We have heard about postcode pricing, and it is true that there are differences in prices. Hon. Members have also said that the fact that oil prices are the same demonstrates that the market is rigged, and we must choose which of those two problems is greater. If prices are the same, it is arguably a perfect market. Perhaps it is true that prices go up more quickly than they come down, but the OFT must look at the evidence.

The counter-evidence on the cartel is that oil companies are leaving UK. If there is a cartel, it is not a very good one—it does not appear to have been done well. Further counter-evidence is that the refinery and retail margin in the UK is among the lowest in Europe. That is odd. Hon. Members have mentioned regulation in Germany, but Germany has a higher retail and refinery margin than the UK, as have Spain, Sweden, Italy and others.

If Members have evidence of a cartel, they must put it before the criminal authorities. A cartel is a criminal offence and directors can go to prison. We should not use the word lightly.