Drivers ripped off £1.6bn a year by fuel retailers pocketing 'significantly' higher margins
- CMA has issued an update on its investigation into the fuel retail sector
- It says the fuel market is still 'failing consumers' a year on from its probe starting
- Fuel companies are now pocketing margins roughly double that of 2019
Britain's millions of motorists are still paying too much to fill up at petrol stations due to retailers pocketing bigger profits from every litre they sell, according to an ongoing investigation into the fuel sector by the UK competition watchdog.
The Competition and Markets Authority (CMA) said that the fuel market is still 'failing consumers' a year on from its first report that laid bare the problems in the sector.
It said that retailers' fuel margins – the difference between what they pay wholesale for their fuel and the price they sell it at – are 'still significantly above historic levels'.
Increases in fuel margins cost drivers more than £1.6billion in 2023 alone, with supermarkets' fuel margins now roughly double what they were in 2019, the CMA added.
The CMA says retailers' fuel margins – the difference between what they pay wholesale for their fuel and the price they sell it at – are 'still significantly above historic levels'
According to RAC Fuel Watch, the average retailer margin on unleaded is 13.8p a litre while for diesel it is even higher at 15.4p. This means around 10 per cent of what motorists pay at the pumps goes to fuel company profits.
In the decade leading up to the Covid pandemic, the average profit margin on both fuels was around just 8p.
And the RAC's historical data shows that supermarkets were pocketing even less. In 2019, the average margin on both fuels was around 3.5p for every litre.
Average retailer margins on fuel in the decade run-up to the pandemic were around 8p a litre. Today, companies are pocketing almost 14p for petrol and over 15p per litre on diesel
The competition watchdog is calling on the Government to use recent legislation to launch a compulsory scheme to ensure that fuel retailers share price information to allow motorists to compare forecourt deals.
The CMA launched a temporary price data-sharing scheme after its initial report found problems in the market, but said it is voluntary and only covers 40 per cent of fuel retail sites across the UK.
Sarah Cardell, chief executive of the CMA, said: 'Last year we found that competition in the road fuel market was failing consumers, and published proposals that would revitalise competition amongst fuel retailers. One year on and drivers are still paying too much.
'We want to work with Government to put in place our recommendation of a real-time fuel finder scheme to kick-start competition among retailers.
'This will put the power in the hands of drivers who can compare fuel prices wherever they are, sparking greater competition.'
Sarah Cardell, chief executive of the CMA, said the industry was still failing consumers. She added: 'One year on and drivers are still paying too much'
The CMA said a smart data, real-time fuel finder scheme would allow motorists to save up to £4.50 each time they fill up and would make it easier to find cheaper forecourts.
It said: 'The proposed introduction of the Digital Information and Smart Data Bill by the new Government could provide the legislative basis to set up a compulsory and comprehensive scheme… which the CMA would welcome.
'Legislation – which is needed to establish the scheme fully – may take time to come into force.
'So that motorists can start to benefit from quicker, easier access to fuel prices through everyday apps sooner, the CMA encourages the Government to introduce an enhanced interim voluntary scheme that is as close to the final scheme as possible.'
RAC head of policy Simon Williams says the latest findings of the CMA's investigation are 'nothing short of outrageous'.
He told us: 'Drivers have every right to feel ripped off, especially knowing there is virtually no market competition between retailers.
'The report is, once again, confirmation of what we have known and been campaigning against for many years. Our analysis has long shown that even accounting for retailers' increased operating costs, margins on fuel are at extremely questionable levels.
'The CMA couldn't be any clearer about what needs to happen.
'We have already written to the new energy secretary, urging him to implement its recommendations as quickly as possible.
'This means greater transparency of fuel prices from all retailers and, most importantly of all, a price monitoring body that can take decisive action on retailers whenever drivers are overcharged. This can't happen soon enough.'
Edmund King, AA president, said 'drivers have been taken for a very expensive ride which is even more worrying during a cost-of-living crisis'.
Gordon Balmer, executive director of the Petrol Retailers’ Association - the body which represents the nation's independent filling stations, forecourts at motorway services and supermarkets, collectively accounting for 65 per cent of all UK fuel stations -, said its members are 'committed to keeping pump prices as low as possible'.
He added that retailers are 'operating in a highly competitive environment which is affected by a range of factors, including cost increases for retailers and geopolitical events' and criticised the CMA's analysis for failing to 'take these complexities into account'.
Balmer went on: 'We support any sensible measures that lower prices for consumers, including continuing the 5p per litre cut and the fuel duty freeze, which accounts for more than 30 per cent of the pump price.'
