Fuel retailers continue to rip-off drivers by pocketing ‘significant’ margins on petrol and diesel in September and October, competitions watchdog says

Fuel retailers continue to make higher-than-normal margins on every liter of petrol and diesel sold to drivers after an investigation by the competition watchdog found they had been inflating their prices to the detriment of struggling drivers.

During September and October, drivers were affected by “significant increases” in operators’ margins when calculating the differences between pump prices and the wholesale price of both fuels, according to an update from the Competition and Markets Authority.

Motoring groups have responded this morning with the AA saying “old habits die hard in the road fuel trade” and the RAC accusing retailers of “taking advantage of drivers at the pumps”.

The CMA update released today said: “During September and October, we have seen significant increases in the retail spread [margins] for both gasoline and diesel.

‘In both cases, the retail spread at the end of October was significantly above the long-term average.

“While the retail spread rises and falls in response to wholesale price volatility, we would expect these spreads to begin to return to normal levels.”

The report, which forms part of the CMA’s commitment to continue monitoring the retail road fuel market, continues: “If retail spreads were to remain at these levels for much longer, this would cause concern about the intensity of retail competition in the sector”. ‘

It also found that supermarket fuel margins in 2023 have been higher than in previous years in percentage terms, although they are slightly lower in 2022 in pence per liter (ppl) terms, due to lower wholesale costs.

However, since August, supermarkets have pocketed larger margins than the pre-2021 average, and these have increased throughout September and October.

However, supermarkets are once again the cheapest stations to fill, according to data from May to September, and the report adds that it has seen “fewer cases of non-supermarket retailers being cheaper than the supermarket average” .

The watchdog said there are still worrying signs emerging from the retail road fuel sector and it will be monitoring prices to see if there is further evidence of “rocket and boom” pricing (when wholesale price increases trigger instant increases in pump prices, but falling wholesale costs are not reflected as quickly at service stations) in the run-up to the busy Christmas period.

The AA’s Luke Bosdet said the failure of retailers to pass on all the savings from lower wholesale costs to hard-pressed motorists, their families and businesses is “unacceptable” in a cost of living crisis.

He added that the Government needs to fast-track legislation creating the statutory fuel price transparency scheme, something recommended as part of the CMA’s initial inquiry into the sector published earlier this year.

‘The AA has been testing public responses to profiling the cheapest pump prices in an area or along a route. “The response from drivers is that they want more transparency,” he said.

The RAC also weighed in on the road fuel retail sector, saying the CMA’s latest findings were “very disappointing” and show that drivers are “still being taken advantage of at the pumps”.

He recently accused Britain’s biggest fuel operators of charging an extra 5p for every liter of petrol sold to drivers, which is equivalent to companies pocketing government funds A 5p tax cut was introduced shortly after the Russian invasion of Ukraine last year to help struggling families cope with the cost of living crisis.

Simon Williams, of the RAC, said: “It is very disappointing that the CMA has found that major fuel retailers are still making much higher margins than in the past, something we have been saying for a long time, as this means drivers are still They are used at the pumps.

‘While supermarket margins may have fallen in the summer, our latest data shows that they have more than made up for this since then and are currently making very large margins.

‘Although, following the summer’s CMA report, the largest retailers are now voluntarily publishing their prices daily for app makers to use, our data shows that this has had no effect on improving competition and reducing Of the prices. In fact, we believe the situation is currently worse than ever, as the wholesale fuel market has fallen significantly, but prices at service stations are falling like the proverbial feather.

‘It is absolutely clear to us that a price watchdog, as recommended by the CMA, is desperately needed as large retailers cannot be trusted to set the fair price of fuel for their customers.

“But unless this body has the power to take action against large retailers who do not lower prices quickly enough in a falling wholesale market, we fear little will change even then.”

Gordon Balmer, chief executive of the Petrol Retailers Association which represents independent service stations across the UK, also responded to the report telling This is Money: “We are pleased to see the depth of participation in the interim scheme of CMA Fuel Price Transparency. We will continue to work closely with the CMA as they develop their permanent scheme.

‘Given the volatility of the global fuel market, it is important that motorists have the opportunity to shop around for the cheapest prices available. As always, I would encourage motorists to shop around to find the best deals possible.’