Robert Halfon
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Robert Halfon Excerpts(11 years, 7 months ago)
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Robert Halfon (Harlow) (Con)
I beg to move,
That this House notes the call for evidence by the Office of Fair Trading (OFT) on competition in the UK petrol and diesel market; however, believes that the OFT and Financial Services Authority should launch a full investigation into oil firms active in the UK; calls on the Government to consider the emergency steps being taken in other G20 countries to reduce fuel prices; notes, for example, the announcement by President Obama to strengthen federal supervision of the US oil market and to increase penalties for market manipulation, and the move by Germany and Austria to establish a new oil regulator with a remit to help stabilise the price of petrol in those countries; and further urges the OFT to note that the Federal Cartel Office in Germany is now investigating oil firms who are active in the UK following allegations of price fixing.
I want to make three points today. First, petrol and diesel have never been more expensive in real terms; secondly, oil companies are uncompetitive, and are not passing on cheaper fuel to motorists; and, thirdly, there is increasing evidence that dodgy speculators are rigging the market and forcing up the international price of oil.
I should begin by saying that today’s debate is happening partly because of the work of FairFuel UK, the hard work of Peter Carroll and Quentin Willson in giving a voice to thousands of motorists across the country—in the space of two weeks, they secured 27,000 signatures—The Sun’s Keep It Down campaign, and the work of the independent Petrol Retailers Association, led by Brian Madderson. Above all, however, it is happening thanks to the Backbench Business Committee, which has found time for fuel debates that have had a significant influence on Government policy, and the many Back Benchers who are here today and who have supported me, particularly my hon. Friend the Member for Cleethorpes (Martin Vickers), the hon. Member for Strangford (Jim Shannon), the leaders of Plaid Cymru and the Social Democratic and Labour party, and the hon. Member for Na h-Eileanan an Iar (Mr MacNeil). [Hon. Members: “Western Isles!”] I did practise saying “Na h-Eileanan an Iar” in my office before the debate.
I also thank my hon. Friend the Member for Hexham (Guy Opperman), and many other Members who have been very active. As can be seen on the Order Paper, the motion was signed by more than 80 Members from all parties: this is not a party political issue, but an issue that affects every single one of us and every single one of our constituents.
First, let me say something about the cost of fuel. Of course, much of that cost is tax. We have had many debates on the subject, and I am pleased that the Government not only cut fuel tax last year, but cancelled two planned fuel duty rises. The price of petrol is 10p lower than it would have been if the last Government’s plans had been implemented. However, despite the fuel tax freeze, prices are still rising, and the Department for Energy and Climate Change says that in real terms fuel has never been more expensive.
Mr John Baron (Basildon and Billericay) (Con)
Will my hon. Friend give way?
Heather Wheeler
I thank my hon. Friend, and congratulate him and the Backbench Business Committee on securing the debate.
My constituents do not understand why fuel prices are still going up, given that we hear so often that the actual quote price has gone down enormously. Perhaps my hon. Friend will say something about that later in his speech.
Robert Halfon
My hon. Friend is a great campaigner against high petrol and diesel prices. Her constituents are very lucky indeed. She will hear me make exactly the same observations later.
Mr Baron
I congratulate my hon. Friend, and support his motion. He mentioned the freezing of fuel tax. May I suggest that the Government should think more about extending the freeze for the foreseeable future and, if necessary, taking funds from areas in which money is being spent unwisely? I am thinking of, for example, aid for India, a country that has its own aid programme. That would help many hard-pressed families and businesses up and down the country.
Robert Halfon
While I strongly believe that we should cut fuel duty as much as possible, I have to say that I am a passionate believer in overseas aid, and I am very proud that we have the overseas aid policies that we have.
Fiona O’Donnell (East Lothian) (Lab)
On a point of order, Madam Deputy Speaker. This is a vital debate, but the Minister was not present at the beginning of it. I wonder whether you could rule on whether or not that showed a lack of respect for Members and for the public at large.
Madam Deputy Speaker (Dawn Primarolo)
Fortunately the Minister is now present to hear the debate, so no further comment is required from me.
Robert Halfon
I must say that I was disappointed by the hon. Lady’s point of order. I made it clear at the outset that this was not a party political issue, and the Minister could not have done more—in his present post, and when he was the Minister responsible for apprenticeships—to show that he cares deeply about issues of this kind.
Mr Scott
I apologise, Madam Deputy Speaker, although some people do feel that that is my best side.
I congratulate my hon. Friend on securing the debate. Last weekend, I happened to have to drive up to Manchester, and I noticed on the M1 that there was a difference of some 12p between the price of petrol in Manchester and the price in London, although the dealership was the same. Surely there can be no explanation for that. Does my hon. Friend share my concern?
Robert Halfon
My hon. Friend is right, and I hope that he will agree with what I shall say later.
I believe that we need to cut taxes on fuel, but given that the oil market makes up nearly half the pump price, oil companies must bear their share of the responsibility. If Members do not believe me, they should listen to what was said by the former head of Tesco, Sir Terry Leahy:
“Filling up the family car has gone up 70% in two years, causing what was a steady recovery to go sideways.”
Yes, the eurozone is a problem, and so is the overhang of debt, but it is expensive energy that is really hurting people on low incomes and crushing our economic recovery.
Secondly, turning to the oil companies, data from the Department of Energy and Climate Change quarterly energy prices release show that there is now a three-week delay between a fall in oil prices and a drop in petrol prices at the pump. However, even accounting for that, a dossier from the website I founded, petrolpromise.com, proves that cheaper oil was not passed on to UK motorists for most of the last two years. That is true of April, July, September, October, November and December 2011, and March, April, and May 2012. That is nine out of the last 18 months.
Robert Halfon
I shall give way to both my hon. Friends in a moment.
In July 2011, oil prices fell by 5%, but petrol prices were unchanged. Then, in March this year, oil prices fell again by 5%, but petrol prices rose by 10%. Why? I shall now give way to my hon. Friend the Member for Mid Bedfordshire (Nadine Dorries).
Nadine Dorries
I shall allow my hon. Friend to answer that, as he is doing so well so far. In my constituency, there are students who cannot take their places at Bedford college, in part because their families used to be two-car families so there was a second car to transport them around, whereas now lots of families are going down to having just one car, because the cost of petrol has increased so much. That is having a huge negative impact on families.
Robert Halfon
My hon. Friend is right, and I shall make the point in my concluding remarks that this issue is not just about economics. Although the economics of it is important, I have sought a debate on this subject because I believe it is about social justice, too, as high petrol prices are hurting the poorest far more than the rich.
Claire Perry
I am grateful to my hon. Friend for giving way again. May I point out that in rural constituencies such as mine the situation is particularly difficult because there is not sufficient competition among petrol stations to drive prices down, and we are very dependent on our cars as we do not have public transport options?
Robert Halfon
My hon. Friend hits the nail on the head. She is absolutely right, and that is why we need an Office of Fair Trading inquiry.
Robert Halfon
I shall make a little progress, if I may.
Returning to the point I was making, when the oil price rises, it is a different story. In December last year, oil prices rose by a fraction, and the fuel price at the pumps instantly rose faster and higher. No market is perfect, but the question for oil wholesalers to answer is this: why are they always benefiting, rather than smaller forecourts or the consumer? It is not just motorists who are being crushed; small retailers are being crushed, too.
In January, independent retailers gave the OFT evidence proving that there is anticompetitive pricing, and that 300 smaller forecourts are being forced out of business every year, leading to petrol deserts in some towns. The fact is that most smaller petrol stations are forced to buy from just a few large oil companies, and at massively higher prices than their “own brand” stations down the road.
Mr Marcus Jones
My hon. Friend is making an important point. Does he agree that it is telling that whereas in 1991 there were 19,247 petrol forecourts in this country, as of last year that figure had fallen to 8,480, despite the fact that the number of cars on British roads had risen by 10 million?
Robert Halfon
The situation my hon. Friend describes is tragic, because when rural communities in particular lose their petrol station, they do not just lose a petrol station: they lose a vital community asset. May I give special thanks to my hon. Friend, too, as were it not for him and the Backbench Business Committee, of which he is a member, we would not be debating this issue today?
John Thurso
On two occasions, the OFT has looked into garages in Caithness for precisely the reasons my hon. Friend has set out. On both occasions, it found that it is not the small local garages that are at fault; rather, it is the distribution centre and the link between them and the oil companies. I am therefore delighted that my hon. Friend has secured this debate, and I hope we will now finally get to the heart of the problem.
Robert Halfon
I entirely agree with my hon. Friend. The point he makes highlights why it is so important that all of us give evidence to the OFT in order to try to force an inquiry.
Mr Jim Cunningham (Coventry South) (Lab)
I am one of the signatories to the hon. Gentleman’s motion. Indeed, last year I raised the oil price issue as I had been down in Cornwall the year before and I noticed that oil tankers were lined up. I am glad we are going to look into these cartels—if there are cartels—and the fixing of oil prices. More importantly, high oil prices feed through in that they lead to people’s cost of living rising, such as through increased bus fares or food prices because of higher transport costs.
Robert Halfon
I am grateful to the hon. Gentleman for that intervention, and for supporting the motion. As he rightly says, this affects every man and woman in the country. Those who do not use cars may well travel on buses, and bus fares have gone up because the price of diesel has gone up. He is precisely right, therefore.
Robert Halfon
I am going to make a little more progress.
Returning to the point I was making, slowly the smaller firms are squeezed out of business. Then, the “own brand” stations put their prices up. This is exactly the same kind of anticompetitive stranglehold that breweries have over pubs, as we have heard in this House.
In my constituency of Harlow, some garages are charging 140p for petrol and 144p for diesel, which is a full 10p more expensive than the cheapest forecourts in the UK. The same complaint was made in Germany about five oil wholesalers who are active in the UK. Germany’s Federal Cartel Office—Bundeskartellamt—acted quickly, and opened a criminal investigation. Why cannot we do that here in Britain, too? Austria has actively started regulating its fuel markets, and the AA has noted the impact of that in respect of keeping fuel prices down. If the oil companies have nothing to hide, they could opt for open-book accounting, and be much more transparent.
Duncan Hames (Chippenham) (LD)
I congratulate the hon. Gentleman on securing the debate. Has he noticed the practice of retail outlets to offer cut-price fuel two days a week, which they sometimes do while also offering fuel at a higher price than only a week ago? This kind of excessive volatility in oil prices seems deliberately designed to confuse motorists so as to make it as hard as possible for them to shop around for the cheapest fuel.
Madam Deputy Speaker (Dawn Primarolo)
Order. Many Members are trying to intervene, and many of them are not on the list of speakers. There are also lots of Members on that list, however, and they may not get to speak if this opening contribution takes too long. I hope the hon. Member for Harlow bears that in mind.
Robert Halfon
May I therefore ask those who want to intervene but who are not on the list of speakers to make brief interventions, and those who are due to speak not to intervene?
We have established that fuel is more expensive than ever, and not only because of tax, but because of anticompetitiveness in the oil market, and we have seen that cheaper oil is not being passed on to motorists. Thirdly, there is the allegation of price-fixing. This means that, even if oil companies were doing the right thing, hedge funds and speculators are rigging the price of oil to keep it artificially high.
Many academics and financial journalists have said that is happening. In a groundbreaking article in The Daily Telegraph, Rowena Mason showed how oil price “benchmarks” are unregulated and—like LIBOR—are vulnerable to manipulation. The petrolpromise.com dossier shows that the Consumer Federation of America has raised the same concerns, as have Deutsche Bank, professors at the Massachusetts Institute of Technology, Maryland university and the London School of Economics. Bloomberg has investigated how banks are buying up strategic stocks of oil and hoarding them on ships at sea, or in underground silos.
A whistleblower who trades the oil futures market has contacted petrolpromise.com and given us a detailed statement about how the market is rigged. He says:
“I trade the oil market on a daily basis, and every day the price is manipulated—not just the daily benchmark price but the calendar spreads that make up a large part of the daily volume. All through July, for example, there has been a massive buying-pressure on oil futures for August and September 2012. Both were trading at around a $0.5c to $1 dollar premium. This gives a false impression of the market and inflates the price of the nearby oil price”.
He goes on to say:
“One part of the problem is a lack of market transparency. In the oil futures market, huge volumes are offered and then withdrawn without trading…There is no reason for this behaviour other than to distort market prices.”
He also says that
“unlike stocks and shares where large holdings have to be declared, in the oil market nobody knows where the money is coming from”.
He continues:
“Prices are particularly manipulated at the close of business, when ‘markers’ are set on an average of trades in the last three minutes of the trading session. Every day, around these times, I see that the structure of the market is being moved to bring prices in line with the trading books of whoever is manipulating the market…This is in order to fix the price and make sure a profit is shown on their books.”
It is a long statement, but I wanted to put the key parts of it on the record.
Robert Halfon
Given what Madam Deputy Speaker said, I will take one more intervention.
Mr Robert Buckland (South Swindon) (Con)
I pay tribute to my hon. Friend for his long campaign, which I fully support. Residents and businesses in my constituency are bemused by a system that is not a free market, because it is not open and transparent. Until we get that transparency that he is so clearly adumbrating, we will not genuinely achieve success for those we represent.
Robert Halfon
My hon. Friend is exactly right; the key issue is transparency. That is why I am asking, as are all the MPs who have signed today’s motion, for an investigation not just by the OFT, but by the Financial Services Authority as well. Last year, President Obama saw the same problems in America and he took action against rogue traders and banks, bringing in tough penalties, including prison, for people convicted of illegal market manipulation. We should do that in Britain, too.
In conclusion, it would be churlish of me not to welcome the modest steps taken by the OFT. I am grateful that it has agreed to hold an inquiry into whether there should be an inquiry, although I note that when I first wrote to the OFT earlier in the year it was less interested. Its chief executive wrote to me saying that
“even where we are able to investigate an issue, we may not necessarily do so, as we prioritise our work according to available resources”.
That was Sir Humphrey’s way of saying no. However, I am pleased that the OFT is inching towards a full investigation. My hope is that this debate will allow MPs to tell the OFT what is happening in their patch and what problems residents are facing. The FSA has agreed to meet the whistleblowers, so that will happen in due course, and I urge it to take further action.
My questions to the Minister are as follows: will he write to the OFT and the FSA setting out his concerns and reflecting what Members say this afternoon? Will he investigate the issue of anticompetitive pricing and how oil wholesalers are bankrupting retailers? Will he look at why some towns, such as Harlow, seem to be stuck with stubbornly higher fuel prices than everywhere else? Some of this debate is technical, but we should not forget that this is not about the economy; I am here today because I believe in social justice and I believe that the high petrol and diesel prices hurt the poor far more than they do the rich.
Robert Halfon
I am sorry but I am not going to give way, as I have almost come to the end of my remarks.
Ours is a great car economy, but high petrol prices are creating a poverty trap, adding to Britain’s dole queues. The Office for National Statistics says that fuel prices are regressive, hitting the poorest Brits the hardest. RAC figures show that an ordinary Harlow worker is paying a tenth of their income just to fill up the family car. The Government define fuel poverty as applying to someone who spends a tenth of their income on fuel, so motorists in Harlow and across the country are facing fuel poverty. I urge the House to support the motion, and I shall end by saying that in my constituency, and no doubt across the country, the question is not whether someone can afford to have a car, but whether they can afford not to have one.