Business

Motoring groups demand petrol price investigation

Petrol drips from a fuel pump
Image caption Petrol prices reached record levels in April

An alliance of European motoring organisations has written to the European Union calling for an investigation into the price of fuel.

The call comes from the Federation Internationale de l'Automobile (FIA) in a letter to the European Union.

The group represents 35 million European drivers, including members of the RAC and AA in the UK.

The FIA said the way petrol prices are currently set was "far from transparent".

Record prices

A full tank of fuel for an average European car now costs around £10 more than it did a year ago.

The price of fuel in the UK reached record levels in April as the cost of Brent crude rose above $125 a barrel.

Although the price of crude has fallen $10 since then, motoring groups say the wholesale price of petrol has not fallen as fast.

The price of crude oil is only one factor affecting the petrol price.

Oil is traded in dollars, so the exchange rate against the dollar has a big impact on prices.

Taxes, transportation and refining costs also vary - impacting the cost of fuel at the pump.

Investigate market

But the FIA says the EU should investigate the way petrol prices are set for the European market.

Most European petrol prices are derived from the Rotterdam spot market where some cargoes of petrol and diesel are bought and sold.

But the FIA is not sure that this market works effectively.

"A platform with such a small volume is doubted to be a representative indicator for the vast European market," said Werner Krauss, chairman of the FIA Eurocouncil.

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Media captionBrian Madderson of RMI Petrol calls for 'fair competition'

The organisation also wants the EU to look into the role of speculators who invest in the oil market.

Mr Krauss claimed the "resulting volatility" in petrol prices had a negative financial impact on consumers.

The complaint is backed by the UK motoring organisation the AA, which is calling for an independent regulator to oversee the petrol market.

"No one is giving us any answer as to why petrol prices are so high," said AA public affairs spokesman Luke Bosdet.

"We need greater transparency so everyone can see we are paying a fair price for fuel," he added.

Retailers have said that prices do go down when the cost of petrol has fallen. One way for sellers to balance the changing price of fuel is to buy in advance.

The UK's largest supermarket, Tesco, say they try to keep prices low and will sometimes buy fuel in advance to balance changes in price.

But in a statement the retailer said it was difficult to predict when to buy.

"As everybody knows, it's very difficult to predict movements in crude oil prices, which can go down as well as up. So it's wrong to say that buying in advance is necessarily an advantage," Tesco said in a statement.

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