The taxman says three and a half million people are due a refund, but two million will have to fork out for underpaid tax.
OFT review into price of petrol
Concerns have been raised over the prices charged for petrol and diesel at the pumps
The Office of Fair Trading (OFT) has launched a review into whether reductions in the price of crude oil are being passed on to motorists.
The watchdog called for information from the industry, motoring groups and consumer bodies amid concerns over the prices charged for petrol and diesel at the pumps.
AA president Edmund King strongly welcomed the OFT's decision to investigate fuel pricing and said the move was "overdue".
The OFT said it will be gathering information over the next six weeks and plans to publish its findings in January.
The UK retail road fuels sector is estimated to be worth around £32 billion, the OFT said. Petrol prices rose by 38% between June 2007 and June 2012, while diesel prices went up by 43% over the same period.
The OFT said it will explore a number of claims about how the road fuels sector is functioning, including whether supermarkets and major oil companies are making it more difficult for independent retailers to compete. The review will also consider whether there is a lack of competition between fuel retailers in some remote communities.
Claire Hart, director in the OFT's services, infrastructure and public markets group, said: "We are keenly aware of continuing widespread concern about the pump price of petrol and diesel and we have heard a number of different claims about how the market is operating."
A Department for Transport spokesman said: "We welcome the OFT's decision. Many motorists are concerned about fuel prices and that when crude oil prices fall, this isn't seen at the pump as quickly as consumers would like. We look forward with interest to the findings of the study."
The OFT began to look at the issue in February when it received a submission from the Retail Motor Industry (RMI), which raised concerns about the ability of independent fuel retailers to continue to compete in the market. Issues raised by the RMI, a trade body which represents car dealers, independent garages and petrol retailers, included low and below-cost pricing of road fuels by the big four supermarkets. The RMI was also concerned that major oil companies involved in road fuel retailing through company-owned sites were selling fuel at prices close to the wholesale prices they charge to independents.
Fuel price campaigners FairFuelUK welcomed the move. Quentin Willson, former Top Gear presenter and FairFuelUK campaigner, said: "There is a widespread feeling that when oil goes up, pump prices rocket immediately - but when the oil price falls, pump prices don't reflect that fall. This causes a sense of complete exasperation and anger."
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