Then the solution has to be to regulate the s*** out of it.
Simply legislate such that anyone who wants to be in the business of selling petrol or diesel in the UK is subject to maximum price limits at the forecourt (note, NOT maximum permissible margins). Then the way they compete with each other is in getting their costs lower.
Let's just have it set by government. The maximum price that can be charged is based on the price of oil, plus the taxes, plus whatever amount we deem acceptable to make being in business worthwhile. That way prices fluctuate to reflect the price of oil, but they go down as well as up - just like oil does.
Since we dropped back from $150 a barrel, BP/Shell/Esso's profits have gone through the roof. They were making money at $150 a barrel, so at $75 a barrel (given the forecourt prices haven't lowered) they're making twice as much!
There is a real argument here about whether absolute essentials like this (and I include electricity, gas, water, etc.) can be left to the markets. The major players are all obviously in cahoots on the pricing - if they weren't then why doesn't someone drop to £1 a litre overnight (they'd still be very profitable) and nick all the market share.
What happened to supermarket price wars on petrol? The major players must have got them onside with a few sweeteners, that's what....
Take MOTs, for instance. The government fixes the maximum charge for the test. Why? Because they believe (and we all know) that left to themselves, garages would work together to raise test prices to the maximum the market could bear. Fuel prices are exactly the same, and this is exactly what the major players are doing - colluding to raise the price of what is essentially a non-optional purchase to the maximum the market can bear.
Edited by gfewster on 13/12/2010 at 17:09
|