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Friday, March 31, 2017

When asked by Petroleum Review to contribute a pump prices missive to this August trade magazine, I was equally flattered and surprised. Turkeys voting for Christmas came to mind. FairFuelUK’s remit since 2011 has been to ensure a fair deal for 37m drivers at the pumps. But then I paused, and recognised that having the chance to air issues impacting on the readership’s customers, shows professional recognition and a willingness to listen.


When this article is published however, the Chancellor will have already given the last Budget to be posted in Spring. FairFuelUK on behalf of its 1.4m supporters will have called upon the Right Honourable Philip Hammond MP, to focus on three asks in this annual fiscal tuning:


1.       Cut Fuel duty to match, more closely those of other developed nations to stimulate all the Nation’s economic dynamics

2.       Ensure a fair deal for 12m diesel drivers and introduce more incentives for motorists to move to cleaner fuels

3.       Invest significantly in new roads and road improvements across the whole of the UK. Such spending will generate a colossal effect on the UK’s Economy and positively benefit the environment too.

 

Yet at the heart of this campaign, millions of drivers remain baffled as to the aetiology of regional variations in fuel prices across the UK that have resulted in some drivers in a year spending substantially more than others when refuelling their car. How can the same fuel brand in one part of the UK charge 20p less than another? Even if the outlet is an independent or a brand owned franchise, why is there so much difference in the cost of filling up? Market forces, we hear, are the reason given time and time again.

 

Our supporters are more than strident in their views about ‘rocket and feather pump pricing’ perceptions, and challenge the industry to be more transparent. Bizarrely, you may be surprised, there is tangible support out there for you, the fuel supply chain, to be successful and profitable. But it must be, by being more accessible as to how fuel is priced, and not allowing the gnawing belief that consumers are just being exploited, when the supply chain holds back, it seems, on oil price falls from being passed on fairly at the pumps.

 

Here is just one raindrop in an ocean of angst based comments supplied by FairFuelUK supporters and your customers.


Bob S said: "when you ask a garage owner about the variation in price branch to branch they give the BS reply blaming different transport costs...they just charge as much as they think an area will sustain before going elsewhere! Andy F said: "Well oil prices are well under $60 per barrel now yet we are paying nearly as much at the pumps as we were when oil was $150 per barrel!!!! Talk about ‘rip off Britain!!!!’ So, what are we going to be paying at the pumps if oil goes back up to $150 per barrel????!!!!”. John FvD said: "It takes 7 weeks for the fall in crude to reach the pumps?? E.g. Why is it when unrest starts in the Middle East on Thursday, the price at the pumps is up on Friday?? We are mugs for putting up with it!”. Mike K said: "We could do with an explanation as to why it is, that when prices go down, it takes weeks to filter through to the pumps because of the oil that is already in process has been paid for at the old, higher rate, but when they go up, the rise is instantaneous???”. Gary R said: "Talk about Tesco taking the P***!!! I’m From Peterborough and the Tesco Extra here for Diesel is £1.219 and I was in Milton Keynes on Friday and Tesco Extra there has it at £1.169 We are always getting ripped off for fuel in Peterborough. Our Local BP Garage currently has Diesel at £1.279!!!! So, everyone should sign FairFuelUK’s petition. I have!”


FairFuelUK gets over 2000 emails each week with an overwhelming theme around the price of filling up. Despite a fuel duty freeze by the Government since 2011, pump prices across the country are far from balanced and their resultant display at the pumps always a mystery with the way they are constructed being less than transparent.

 

Fuel Duty remains the most influential of taxes on the UK Economy, particularly on inflation, business investment, consumer spending and jobs. Notwithstanding, the UK still having the most punitive rates in the world, particularly for diesel, we are indeed hugely grateful for the Conservative Government’s continuing freeze in this levy to 2018. Without our campaigning drivers would be paying 20p more at the pumps.


In the Treasury’s own analysis published in April 2014, they themselves impart: ‘reductions in duty will increase GDP by between 0.3 and 0.5 per cent in the long-term’. HMT’s own analysis showed cutting Fuel Duty increases profits, wages and consumption which all add to higher tax revenues. 

 

Our own commissioned annual surveys by Independent economists from the CEBR since 2011 bears out the department’s conclusions. The Duty freeze of 2016 boosted GDP by 0.57% and supported the generation of an additional £10.1 billion to GDP. Aggregated up across all households, these savings due to the freeze in duty amount to nearly £5.3bn being put back into consumer spending. The freeze also created 112,000 jobs whilst benefiting an increase in tax revenues of 0.2%.


146 MPs support FairFuelUK’s core objectives of either cutting or maintaining a freeze in Fuel Duty. Charlie Elphicke, Chair of the APPG for FairFuel said: "FairFuelUK’s evidence shows that cutting fuel duty would be a huge boost for the hard-working classes of modern Britain. It would mean more jobs - and more money in the pockets of families and small businesses. This is a powerful case for the Chancellor that lower fuel duty will help turbocharge growth in Brexit Britain."

Whilst prices at the pumps are dominated by the huge tax take of duty plus VAT, the variations in the commercial component is orchestrated by the fuel supply chain. And there’s the thing, in the 38 days post the Brexit vote, to the 1st of August wholesale fuel prices fell 5%, oil dropped 10% in sterling, yet pump prices hardly moved. But in the 11 days between 27th of Sept and 7th October wholesale prices moved up 5% so pump prices rose almost overnight and continued to climb.


But that is not the whole story. Diesel driver exploitation appears rampant too. In the last 2 years, average wholesale prices for derv matched petrol, but at the pumps diesel averaged 2p per litre more. Why was that? One reason for diesel’s price level: larger businesses and hauliers use fuel cards to get discounts for diesel at the pumps. These discounts for business users must be carried by the retailers, so they hike the price at the pumps to pay for the loss in the fuel card commissions.


An independent fuel retailer, who wants to remain anonymous due to commercial threats from his wholesaler, told FairFuelUK: "My fuel wholesaler is doing us again. They normally work a week in arrears - always have done so with prices changing on a Tuesday morning. This week however, they are changing our prices to commence tomorrow to enable them to earn extra at the expense of us independents and my customers. Shocking behaviour !!”


So, that is why we need PumpWatch. Consumers are protected by OfGem and OfCom so why can’t there be a fair pricing watchdog for 83% of the electorate, we call PumpWatch, as well. This initiative has huge support amongst all Political Parties. Charlie Elphicke MP for Dover said: 'The Government should set up PumpWatch - a powerful watchdog to ensure millions of drivers get a fair deal. We must build a Brexit Britain that works for every family, every small firm and every driver - a Britain that works for everyone must include a fair deal on fuel prices.' Rob Flello Labour MP, Transport Select Committee member and Chair of the Freight Transport Parliamentary Group said: "Motorists and professional drivers continue to be ripped off by an industry that hides the true costs of producing our fuels. The new Prime Minister has the chance to end this disgrace. Of course, the fuel industry could voluntarily stop excessive profiteering, but without government intervention there's no sign of that happening."


Moreover, much of the focus from pricing at the pumps could be moved to the huge tax take on all fill-ups if retailers showed not only VAT on receipts, but also the Fuel Duty and VAT on this levy, the double taxation so hated by drivers. Peter Aldous MP for Waveney, with FairFuelUK’s help, presented a 10 Minute Rule Bill in the House of Commons in February, calling for this tax transparency to be on all fuel receipts.  With total fuel taxation hovering between 65 and 70%, and with a Government who prides itself on being open and transparent on issues of taxation, it is right 37m drivers should see the magnitude of tax they pay every time they fill up their tanks and for such an essential resource.


It’s clear that a PR offensive by the industry to work with its customers through FairFuelUK would help considerably in reducing the cost of motoring, drive down inflation and benefit the economy. Such a move will show the receptive heart of an industry that is not loved but is critical to all our lives. 

 

Howard Cox. Founder of the FairFuelUK Campaign 




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