Competitive Rewards Question Rising Fuel Profits Despite Falling Prices in the UK
UK motorists may be paying more than a fair amount for petrol and diesel, after the Competition and Markets Authority (CMA) reported that fuel profits remain at “persistently high” levels despite falling forecourt prices. The authority also called on retailers to review their claims that this is due to rising operating costs.
In its first annual road fuel monitoring report, the CMA pointed to weak competition in the sector. The report was published as the government prepares to launch the “Fuel Finder” campaign, which will allow drivers to compare actual fuel prices in real time.
The price of a liter of petrol reached 136.8 pence last week, according to government statistics, while the price of a liter of diesel was 146.1 pence.
The CMA report showed that fuel prices have fallen “significantly” since the last study in 2023, primarily due to lower oil prices.
However, the report showed that fuel outlets, whether in supermarkets or elsewhere, boast “historically high rewards.” The report noted that “average percentage fuel margins continued to rise for all supermarket and non-supermarket retailers.”
The report noted fuel retailers’ claims that labor costs have increased, but added, “we would expect to see this reflected through lower fuel profits.” The CMA indicated that if competition existed, fuel prices at the pumps would be lower.
The BBC has contacted fuel retailers and supermarkets for comment. Fuel retailers will be forced to register for the upcoming “Fuel Finder” campaign and report price changes within 30 minutes of implementation.
The CMA noted that “this” will be available via apps and navigation systems, enabling drivers to compare prices easily, adding that “in turn, this is expected to increase competition among retailers for customers, putting downward pressure on prices.” The CMA added that it “will take action against retailers that breach the terms of ‘Fuel Finder,’ which may include fines.”
Dan Turner, Market Director at the CMA, stated: “Fuel margins remain at high and persistent levels—and our latest analysis shows that labor costs do not explain this. We know that fuel costs are a big issue for motorists, especially at this time when millions of drivers are heading off on trips across the country.”
The RAC agrees that motorists are overpaying for fuel. The RAC noted that since November, the retail price of petrol has fallen more than 7 pence per liter, while average forecourt prices have fallen by only two-thirds of a penny.
“This comes at a time when millions of drivers are taking to the road for Christmas and are being exploited in their fuel purchases,” the RAC added.
“Drivers are paying high prices at gas stations, as the CMA makes clear.”
RAC policy head Simon Williams said: “Many drivers will not be surprised to hear they are still overpaying for fuel, especially given the complaints we receive about the huge variations in prices from one area to another.” He added that “retailers’ claims regarding increased operating costs were simply rejected by the CMA.”
Williams said: “We strongly hope that the new ‘Fuel Finder’ campaign, along with continuous monitoring by the CMA, will lead to increased competition and lower forecourt prices for motorists across the country.”
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