Wyre Forest MP has successfully presented the first stage of a Bill to give powers to crackdown on dubious higher fuel prices in rural areas.
Motorists across Wyre Forest will know that the closer they get to Birmingham the cheaper the fuel is. This is certainly the case with supermarket forecourts. Road fuel pricing mechanisms take into account many factors such as the wholesale price, when they bought the fuel and logistical costs. However these do not justify why Kidderminster and Bromsgrove, though very close together and supplied by the same supermarket companies, can pay up to a 7p difference in price per litre. Today in Parliament Wyre Forest MP Mark Garnier said that trying to understand why this happens is "is like trying to read and understand a dark art".
Mark Garnier was today presenting the first stage of his Bill to bring more rural justice to fuel pricing. The Bill, if enacted, will give powers to the Competition and Market's Authority (CMA) to investigate and "iron out" price discrepancies between cities and rural towns, on motorways, and between petrol and diesel. The Bill had no opposition and will face the next stage of scrutiny on the sixth of March, the Second Reading.
The main target of the Bill will the supermarket companies. Mr. Garnier said, "Supermarkets, with just 16% of outlets, dominate the market with 44% of the volume market share-just four big supermarket chains in the UK hold 44% of the market." The supermarkets check prices within a three mile radius and if they have no significant competition, as is the case in rural areas, then they raise prices. This can be used to offset the lowering of prices in areas with a greater number of people and petrol stations leading to fiercer competition. This leads to rural populations being a captive customer base. Independent dealers often cannot afford to compete with these fuel retail giants, as a large supermarket can come into an area and drop the price, putting the independent out of business. Accordingly Mr. Garnier, though his Bill, seeks to ensure that people who live in areas where petrol stations are few and far between, and public transport networks are poor, are not penalised for it.
Mark Garnier MP said in his speech in Parliament, "I am an enthusiast for markets being allowed to drive positive outcomes for the consumer; I am an advocate of free market economics and support healthy competition. However, in our complex world, from time to time markets fail to deliver exclusively fair outcomes, and when markets go wrong I believe intervention should happen, as is the case with road fuel pricing."