PARLIAMENTARY DEBATES - United Kingdom Parliament

639 15 MAY 2013 Petrol Prices
640
12.35 pm
Petrol Prices
The Secretary of State for Energy and Climate Change
(Mr Edward Davey): With permission, Mr Speaker, I
would like to make a statement on petrol prices and the
cost of living.
On 14 May, officials from the European Commission
directorate-general for competition carried out
unannounced inspections at the premises of several
companies active in the crude oil, refined oil products
and biofuels sectors, including Statoil, BP and Shell.
The Commission has concerns that the companies may
have colluded in reporting distorted prices to a price
reporting agency to manipulate the published prices for
a number of oil and biofuel products. Any such behaviour,
if established, may amount to violations of European
antitrust rules that prohibit cartels and restrictive business
practices and abuses of a dominant market position.
This Government are deeply concerned by any allegation
that prices for consumers could have been artificially or
unnecessarily driven up. The UK Government and
regulators will provide any assistance necessary to the
European investigators, and we expect the companies
concerned to fully comply with these investigations.
However, these investigations are at an early stage and
the Commission has made it clear that investigations do
not imply guilt. Until the facts are clear, it would be
inappropriate to comment further on this investigation.
I should also be clear to the House that these investigations
are not directly linked to the allegations of market
manipulation in the gas markets, which Ofgem and the
Financial Services Authority are continuing to review.
This Government believe strongly that it is in our
mutual interest for motorists and businesses to be confident
that they are being treated fairly, and that when wholesale
costs come down, these reductions are passed on
transparently and without unnecessary delay. That is
why we welcomed the Office of Fair Trading’s decision
to look into the market for road fuels in late 2012. At
that time, the OFT did not receive evidence on the
impact on pump prices of potential manipulation of
derivatives markets and the accuracy of reported prices
of crude and wholesale road fuel that built the case for
such an investigation. However, it did set out that it
believes such manipulation is possible and encouraged
market participants to approach the OFT and FSA, as
appropriate, if they had evidence of such practices.
In a case such as this, where there are potentially
cross-border issues, it is more appropriate for the
Commission to lead the investigation. The OFT has
and will continue to co-operate fully with the Commission.
This Government have taken direct action to ease the
burden on motorists. Due to action taken in this year’s
Budget, fuel duty will have been frozen for nearly three
and a half years, the longest duty freeze for over 20 years.
That builds on previous action to cut fuel duty, abolish
the previous Government’s fuel duty escalator, introduce
a fair fuel stabiliser and scrap two increases planned by
the previous Government. As a result of Government
actions, average pump prices are 13p per litre lower
than if the Government had implemented the fuel duty
escalator, and they are forecast to be 18p per litre lower
by the end of the Parliament. Furthermore, as reported
by the OFT, the UK consistently has among the lowest
pre-tax petrol and diesel prices in Europe.
In the OFT’s investigation it identified an absence of
pricing information on motorways as a concern and did
not rule out taking action in some local markets if there
is persuasive evidence of anticompetitive behaviour.
The Government are now acting on this recommendation
and increasing transparency of motorway fuel prices.
More widely, this Government’s reform of the
competition regime will improve the speed, robustness
and independence of decision making in UK competition
enforcement. Creating a single Competition and Markets
Authority and modernising its competition toolkit will
improve markets and help consumers and businesses by
providing greater coherence in competition practice
and a more streamlined approach to decision making.
The Government are also publishing a draft consumer
rights Bill to give consumers clearer rights in law and to
ensure that consumer rights keep pace with technological
advances. That will give consumers greater confidence
to take up new products, switch suppliers and make
online purchases.
Although we cannot control volatile world energy
prices, we can still help people get their bills down. The
easiest ways to get energy bills down quickly are to get
consumers paying the lowest possible tariffs and to
reduce the amount of energy that is wasted.
We are ensuring that all households get the best deal
for their gas and electricity by using the Energy Bill to
give statutory backing to Ofgem’s retail market review
proposals. Those proposals require energy suppliers to
move consumers on poor value dead tariffs to the
cheapest standard variable rate tariff, so that no customers
are left behind on a poor value, out-of-date tariff. They
will also create a new tariffs framework to reduce the
number of tariffs that suppliers can offer to four per
payment method and simplify tariffs so that the market
is much more manageable for consumers. Customers
will have personalised information from their supplier
on their bills about the cheapest tariff that the supplier
offers and any savings that they could make by moving
to it.
These proposals will put consumers in the driving
seat, giving them clearer choices and incentivising companies
to compete hard for their custom. We hope that Ofgem
can keep to its projected timetable, which could see
measures begin to be implemented from summer 2013,
with full implementation expected by March 2014.
Through the green deal and the roll-out of smart
meters, we are helping people to reduce the amount of
energy that they use so that they can have warmer
homes for less and lower bills than otherwise. We know
that the poorest and the most vulnerable often struggle
to pay their energy bills. Through direct payments, such
as the winter fuel payment and the cold weather payment,
we are helping them directly to manage their bills.
We are also determined to ensure that Ofgem has the
necessary powers so that consumers do not lose out
when energy companies break the rules. Although Ofgem
can fine energy companies up to 10% of their annual
turnover for breaking the rules, unless it can agree
compensation for consumers with energy companies,
such fines are currently paid into the Consolidated
Fund. That is why we are legislating, through the Energy