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Fuels: Competition

Volume 471: debated on Wednesday 30 January 2008

To ask the Secretary of State for Business, Enterprise and Regulatory Reform what steps he is taking to encourage a competitive energy market in the bottled gas and oil sector for households that are off-network. (181164)

The price of bottled gas and other oil derived products is influenced by the price of oil in the international oil market. The Government believe that the consumer is best served by the operation of open competition between companies, and the supply of oil products is a commercial matter, subject to UK competition law under the Competition Act 1998. The regulation of supply of oil products, including bottled gas, to consumers is therefore the responsibility of the Office of Fair Trading, which monitors the market.

In addition, the Competition Commission (CC) recently carried out an investigation into the supply of bulk liquefied petroleum gas (LPG). The conclusions were published in June 2006, and are available at:

The report highlighted a number of issues that prevent, restrict, or distort competition for the supply of domestic LPG, and provides measures to be taken. Following which the CC arrived at a package of remedies, consulted on these, and is looking to impose them through an order on the industry. More information is available on the CC's website:

The proposed remedies will also try and address the issue of price transparency, as they propose that LPG suppliers will be required by order to:

provide to any industry trade associations of which they are members contact details and details of areas served; and

provide price quotes on their web sites and over the phone to consumers.

The OFT has been closely involved in this work as it has progressed. The order is likely to be published in January and it will come into full force later in 2008. The OFT will monitor the effect of the order and follow up any alleged breaches of it with the suppliers concerned. It is to be expected that the increased ability of consumers to switch supplier will increase competition in the market and put downward pressure on prices.