ENERGY firms, airlines and other companies have been put on notice that they must pass on the benefits of a dramatic fall in global oil prices or face possible state action.

 

Chancellor George Osborne has initiated a Government investigation into whether key sectors such as utilities are reducing consumer bills and is said to have told colleagues at yesterday's Cabinet meeting that businesses would be "watched like hawks".

All four supermarkets have announced a 2p cut in the cost of a litre of petrol as slumps leave a barrel of Brent crude trading at less than 52 US dollars a barrel, the lowest price since May 2009.

Mr Osborne said that the move was welcome - noting that it came after heavy media pressure - but that more action was required.

"Vital this is passed on to families at petrol pumps, through utility bills and air fares," he wrote on Twitter.

A Treasury spokesman said: "The Government is conducting studies of industries like the utilities and the airlines. We are examining if any action needs to be taken."

Shetland MSP Tavish Scott also called for plunging oil prices to be passed on to airline passengers with cuts to fares.

Mr Scott urged the island's main carrier, Loganair, to slash its ticket prices to reflect the falling cost of fuel and said all airlines should be passing the savings onto consumers.

Mr Scott said: "We have now seen four months of steadily falling oil prices. Why therefore have the airlines not reflected that in ticket prices?

"Shetlanders still pay full fare tickets of £400 plus to get to the Scottish mainland. Loganair also get the Air Discount Scheme money that cuts ticket prices by 40 per cent. So it is time that these savings were passed on to island travellers."

A spokesman for Loganair said: "No fuel surcharges have been applied by Loganair since 2006. 

"The recent and dramatic reduction in oil prices was completely unforeseen.  Loganair, in common with most airlines, manages the risk of fuel price changes by purchasing its fuel up to one to two years in advance. 

"At a time of falling prices this can unfortunately mean that the airline does not see the benefit of falling prices for an extended time.

"An additional factor is that fuel prices are in US dollars.  With the recent decline in sterling against the dollar this has had an impact on the final price in sterling."

Around one third of the cost of an airline ticket is made of fuel costs, but industry experts said they did not expect to see the recent fall in oil prices mirrored by cheaper fares.

Kevin Thom, president of the Scottish Passenger Agents' Association, said: "Airlines will say they've hedged their fuel costs, so if they bought at $80 a barrel and it went up to $120 they were losing money.

"Now it's at $50 or $60 they're going to be making hay while the sun shines, as they say."

Meanwhile, the Scottish and UK governments have come under fresh pressure to support North Sea firms as oil prices tumbled, sparking warnings of tens of thousands of job losses and the cancellation of new projects.

Jim Murphy, the Scottish Labour leader, called on ministers in Edinburgh and London to attend a summit - first proposed last year by Aberdeen City Council - to address growing problems in the North Sea oil industry.

He also urged the Scottish Government to create a "resilience fund" to help avert large scale lay-offs in key industries.

Speaking after a round of visits to industry representatives, trade union leaders and councillors in Aberdeen, Mr Murphy said he was willing to lead a delegation from the city to see ministers if they refused to attend the proposed summit.

He said: "The Scottish Government cannot sit on their hands and call it someone else's problem.

"When the livelihoods of thousands of Scots are on the line, they need to be taking action."

A spokesman for energy firms insisted that price cuts were being passed on in full - with consumers now able to pay £100 less a year if they looked for the best deals.

Energy UK chief executive Lawrence Slade said: "Energy suppliers are passing on price cuts to customers.

"When people shop around they can easily find deals that are over £100 cheaper than this time last year and in line with cuts in wholesale energy prices."

Energy and Climate Change Secretary Ed Davey said: "The Government will be watching energy companies like hawks to ensure falls in wholesale gas prices are passed on as quickly as possible to consumers."