A LEADING motoring organisation has called for new government regulations to ensure that reductions in global oil prices are passed on to drivers.

The Automobile Association (AA) said the UK should introduce a fuel regulator to act as an “honest broker” between oil companies and petrol and diesel retailers after it claimed pump prices were being kept artificially high.

Its intervention came ahead of a Westminster debate yesterday on fuel prices and amid further evidence of the economic damage they are causing for businesses and consumers.

The high price of petrol was blamed for a slowdown in sales by Tesco.

The AA has likewise found more than 70% of its members have cut back on car use or other family spending, up from 63% over Christmas and New Year, according to a Populus poll of more than 15,000 people.

It reported last month that oil had gone down $10 a barrel but this had only led to a 0.5p drop in the average price of a litre of petrol in the UK days later.

Its findings were backed yesterday by Robert Halfon, the Tory MP for Harlow, who called for new windfall taxes on oil companies who were not passing on savings to motorists.

“I believe in competition and choice. When a market is cornered by vested interests and semi-cartels such as big oil companies, it is right for the Government to establish the conditions for a fairer market,” he said.

“We need a fuel rebate so that when the oil price falls, big companies face a choice – either cut prices or the Government will continue to impose a windfall tax on profits and use the money to cut petrol prices.”

Despite a 1p per litre cut in fuel duty announced by Chancellor George Osborne in March, fuel prices continued to rise and set a new record of 137.43p in May, before falling again.

But the allegations of profiteering were rejected by the UK Petroleum Industry Association, a trade body which represents UK refineries.

A spokesman declined to be drawn on recent price fluctuations but an analysis published in March claimed fuel retailers operated in a “low margin business” characterised by fierce competition on price between supermarkets and independently owned forecourts.

Taking out excise duty and VAT, which made up an average 64% of the pump price of petrol and diesel in 2010, the UK has had the lowest pump prices in Europe over the last eight years, the analysis found.

In a similar vein, RMI Petrol, which represents independent forecourts, recently complained a lot of businesses were going bust after being squeezed by fuel discounts offered by supermarkets. Increased competition has seen the number of filling stations in the UK fall from 18,000 in 1994 to 8921 in 2009.

Treasury Minister Justine Greening said Labour had left the coalition facing the introduction of a fuel escalator which would have resulted in seven increases in duty. This could have resulted in prices being 6p a litre higher while there was “no plan in place to support motorists”, she said.

Ms Greening added: “We as a Government recognise motoring is an essential part of life for households and businesses.

“Fuel costs are something that affect us all and as the rising price of petrol has continued, those costs have become a more significant part of everyday life for people and companies.”

She added that the Government was also waiting for the European Commission to sign off its proposals for a rural fuel rebate, which will provide motorists in the Inner and Outer Hebrides, the Northern Isles, and the Isles of Scilly with an additional 5p a litre discount.

Motoring broadcaster Quentin Willson, who represents the FairFuelUK campaign, said: “I think the Government know there is a massive timebomb and we have a new social phenomenon called ‘petrol poverty’ which will divide society.”