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Government 'watching petrol firms'

Petrol firms have been warned that the Government will be "watching very carefully" to make sure the fall in the price of crude oil is passed on to motorists at the pumps.

Treasury Chief Secretary Danny Alexander will demand an assurance from the major players in the industry that they are doing all they can to pass on the benefits of the slump in global oil prices to consumers.

The Government's message came as the latest round in a supermarket price war saw Asda, Sainsbury's, Tesco and Morrisons all announce 1p cuts in the price of their fuel.

In Asda's case, this means petrol will fall to 119.7p a litre - the first time the price has dipped below 120p in four years - while diesel will be 123.7p .

Chancellor George Osborne said : "Our message today is very clear: the oil price has fallen, we expect that to be passed on to people at the petrol stations as they fill up their cars. We expect the oil companies to do this and we will be watching very carefully to make sure that they do."

Mr Alexander said the Government had cut and then frozen fuel duty to help motorists and now it was time for the industry to take action.

"Now that we see global oil prices falling, we need make sure that those prices are passed on at the pumps," he said on a visit in Aberdeen.

"That's something I'm calling on the fuel retailers to do today, to make sure that they deliver every penny of benefit they can to the consumers of fuel and diesel in every part of the United Kingdom."

He welcomed the supermarkets' announcements and added: " I hope very much that we see a similar response from other fuel retailers over the weeks to come.

"I think that energy companies are hearing this from Government, they are also hearing it from their customers.

"It's right that these large reductions we are seeing in the world oil price get passed on to the people who are consuming the end product at the petrol station.

"We've seen significant reductions over the past few weeks but there is more to come, and I just want to make sure that that does come, as quickly as possible, for the hard-pressed people of the United Kingdom."

Brent crude slumped to 82 dollars a barrel earlier this week, its lowest level in just over four years.

Liberal Democrat minister Mr Alexander was writing to firms involved in the fuel industry " seeking their assurance that they are doing all they can to pass on the benefit of falling oil prices as quickly as possible".

But campaigners said the Government has not done enough to help motorists, with tax still accounting for the largest share of prices at the pump.

Lobby group FairFuelUK called for an inquiry into petrol prices by the Office of Fair Trading and also demanded a 3p cut in fuel duty.

Quentin Willson of FairFuelUK said: "We can't have a posse of speculative operators, led by the big banks, playing games with our financial future.

"The recession in 2007/08 began when the supply chain buckled under the weight of the 145-dollar barrel. We simply cannot ever allow that to happen again.

"In our opinion, the sooner we have legislation to stop opportunistic oil speculation by non-physical trading activity, the better."

RAC Foundation director Professor Stephen Glaister said: "It is encouraging that Mr Alexander shares the concerns of the nation's drivers but in a way he is passing the buck.

"The biggest driver of pump prices remains the Government. Well over 60% of the price is tax. And that share could rise sharply with the reintroduction of the fuel duty escalator.

"Though the Chancellor has said he will freeze fuel duty until the election, he has also committed to hikes in duty above the rate of inflation if the oil price falls to 75 dollars a barrel. Which is it to be?"

AA president Edmund King welcomed the Government move, but said: " Lower pump prices also expose more fully the burden of fuel taxation, currently around 65% of the cost of a litre of petrol.

"The Government has undertaken to freeze fuel duty until the election, but any political party that advocates a fuel duty increase afterwards will suffer a backlash - such has been the trauma for families and businesses of pump price spikes from 2011 through to last year."

Shadow chief secretary to the Treasury Chris Leslie said: "Of course it's right that drivers should benefit from falling oil prices with lower prices at the pumps.

"But since 2011 people have paid 3p more on every litre of petrol because the Lib Dems broke their promise and backed the Tories in raising VAT."

But a Lib Dem source said: "If this is how Labour do maths it's no wonder they crashed the economy and forget to talk about the deficit.

"The truth is if we did not axe their plans to increase fuel taxes by inflation, scrap their fuel duty escalator and cut fuel duty ourselves, motorists would now be paying 20p a litre more at the pumps."

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