Competition watchdog has found drivers were hit by ‘significant increases’ in fuel retailers’ margins during the past two months
A new report from the Competition and Markets Authority (CMA) said that by the end of October the differences between pump prices and the wholesale cost of petrol and diesel were ‘a cause for concern’.
Sarah Cardell, Chief Executive of the CMA, said:
‘Over the summer we saw rising wholesale costs, but more recent trends give cause for concern that competition is still not working well in this market to hold down pump prices.’
This is the first quarterly monitoring report from the watchdog since recommending in July that retailers provide live pump price information, and a price monitoring body is created to improve competition in the road fuel market.
The Government has pledged to legislate for both measures.
Competition ‘not working as it should’
The CMA analysed fuel prices at the pump for drivers from the end of May 2023 to the end of October 2023. It found pump prices for petrol have increased by 11 pence per litre and by 13 pence per litre for diesel.
From June to August, this was driven by global factors such as increased crude oil prices. However, wholesale prices reduced in September and October while retail prices did not.
The regulator is concerned that if this trend continues it could indicate a lack of competitive response from fuel retailers.
Major fuel retailers fail to share data
The CMA analysed retail spreads for supermarkets, which show the difference between average pump prices and benchmark wholesale costs for fuel.
Retail spreads are likely to be similar to margins, which are based on the difference between what a supermarket pays for its fuel and what it sells at.
Today’s report relies on voluntary sharing of information and is missing wholesale cost data from some major fuel retailers – Shell and Moto-Way.
Cardell said: ‘That’s why it is so important that a permanent fuel monitor – with powers to demand information from all retailers – is put in place to give a fuller picture of how the market is working.’
The CMA will continue to monitor and report on fuel prices on a quarterly basis until the new monitoring body is in place.
Fuel price margins ‘worse than ever’
The CMA provided detailed figures for supermarket fuel retailers’ margins up to the end of August. These show the figure for the first eight months of the year was 8.1%, despite a fall in the summer.
That is higher than the six preceding entire years, which ranged from around 4% in 2017 to 7.6% last year.
RAC fuel spokesman Simon Williams said: ‘It’s very disappointing that the CMA has found that major fuel retailers are still taking far bigger margins than they have done in the past, something we have been saying for a long time, as this means drivers are still being taken advantage of at the pumps.’
‘While supermarket margins may have fallen in the summer, our latest data shows they have more than made up for this since then and are currently taking very large margins’
‘We believe the situation is currently worse than ever as the wholesale fuel market is down significantly, yet forecourt prices are falling like the proverbial feather.’
AA fuel price spokesman Luke Bosdet said: ‘Old habits die hard in the road fuel trade. Failure to pass on the full savings from lower wholesale costs to hard-pressed motorists, their families and businesses is unacceptable in a cost-of-living crisis. The Government needs to speed up the legislation that creates the statutory fuel price transparency scheme.’
The UK’s four major fuel-selling supermarkets are Asda, Morrisons, Sainsbury’s and Tesco. They were each approached for a comment.
How to get the best deal at the petrol pump
Retailers currently only provide information on prices at petrol stations, making it difficult to shop around unless you’re willing to drive around looking at prices.
There are a number of websites and apps that help you compare diesel and petrol prices. One example is PetrolPrices.com which uses fuel price data collected from fuel card transactions, customers using its app and verified forecourt owners to publish comparable fuel costs.
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