Energy giants face petrol price probe: Market at risk of manipulation, warns watchdog

• Critics say pump prices are painfully slow to fall when price of oil falls on international market
• Petrol prices rose by 38 per cent between June 2007 and June 2012

Petrol prices are to be investigated by the Office of Fair Trading, it emerged yesterday.
The watchdog will examine whether falls in the cost of crude oil are passed on to customers or simply siphoned off beforehand.
Critics stress that prices at the pumps are quick to rise when the price of crude oil goes up, but the cost to motorists is slow to fall when crude becomes cheaper.

The OFT will collect evidence from the fuel industry, motoring groups and consumer bodies – and admits the market could  be 'susceptible to manipulation  or distortion'.
Those under scrutiny include major petrol firms and the big four supermarkets (Tesco, Asda, Sainsbury's and Morrisons) as well as City speculators.
Between June 2007 and June of this year – a period that saw considerable volatility at the pumps – the price of petrol rose by 38 per cent while diesel rose by 45 per cent.
As a result, Chancellor George Osborne is under intense pressure to ditch a forthcoming 3p-per-litre fuel duty rise, which he has already deferred from last month to January.
The OFT said the fuel market for Britain's 33million motorists is worth around £32billion a year, and accounts for 5p in every £1 of household expenditure.
'In light of continuing public concern about pump prices, the OFT wants to identify whether or not there are competition problems that it can tackle in the sector,' the watchdog confirmed.

Prices at the pumps are quick to rise when the price of crude oil goes up, but the cost to motorists is slow to fall when crude becomes cheaper

Between June 2007 and June of this year ¿ a period that saw considerable volatility at the pumps ¿ the price of petrol rose by 38 per cent while diesel rose by 45 per cent

It added that its investigation will examine 'whether reductions in the price of crude oil are being reflected in falling pump prices'. It will also look at competition in the market.
'Some practices of supermarkets and major oil companies may be making it more difficult for independent retailers to compete,' the OFT noted. 'This could reduce competition in the sector if it leads to independent retailers closing.'

Calls: AA president Edmund King said an OFT investigation of this market is overdue

City speculators will also be investigated, as well as the phenomenon of 'price co-ordination' – otherwise known as price-fixing.
The investigation will last six weeks, with the results to be published in January.
The OFT cited the AA's Fuel Price Report, which showed that in the 2007-12 period the price of petrol at the pumps rose from £0.97 per litre to £1.34, while the pump price of diesel rose from £0.96 per litre to £1.39.
The watchdog is also mindful of price abuse in Germany, Spain and Australia.
Edmund King, president of the AA, welcomed the OFT's investigation but said it was 'long overdue'.
He complained that drivers have been victims of record price hikes amid falling oil costs, adding up to 5p a litre to their bills.
'We see this investigation as absolutely key to getting a fair fuel price in the UK,' he added. 'Few drivers feel we have that at the moment.'
Mr King said petrol currently costs about 138.90p a litre – within 4p of the record of 142.48p set in April.
'Without price transparency, drivers have little way of  nowing if they are paying a fair price or not, and retailers can't prove that what they charge for fuel fairly reflects what it costs them,' he warned.
Professor Stephen Glaister, director of the RAC Foundation, said he welcomed scrutiny of the 'rapid decline' in the number of petrol stations from 18,000 in 1990 to fewer than 9,000 today, as well as the effect on fuel prices.
The Department for Transport said: 'Many motorists are concerned about fuel prices and that when crude oil prices fall this isn't seen at the pump as quickly as consumers would like.'