Drivers are being overcharged for petrol and diesel, the UK’s consumer watchdog has said, dismissing forecourt operators’ excuse for charging more at the pump.
Fuel retailers have said they are unable to lower pump prices to keep pace with falling global oil markets because they need to make up for higher non-fuel “operating” costs, such as wages and energy.
However, an analysis by the Competition and Markets Authority (CMA) concluded this was not the case.
The watchdog said that, while retailers continued to make strong profit margins on fuel compared with past levels, data suggested operating margins were also elevated.
“Fuel margins remain at persistently high levels – and our new analysis shows operating costs do not explain this,” said Dan Turnbull, the senior director of markets at the CMA. “This indicates competition in the sector is weak – if it was working well, drivers could see lower prices at the pump.”
The AA and RAC motorists’ groups said the report confirmed that motorists were being charged too much for fuel.
The RAC’s head of policy, Simon Williams, said the CMA had “clearly rejected” the rationale put forward by petrol retailers.
The AA said the wholesale cost of petrol paid by retailers had “crashed by more than 7p a litre” since the end of November, adding: “With the VAT at the pump, that should be a saving of 8.4p, or £4.60 a tank. Instead, the average petrol pump price has fallen just two-thirds of a penny.”
“This is classic ‘rocket and feather’ pricing at the pumps and the bane of UK drivers,” an AA spokesperson said, a reference to retailers putting up prices quickly when fuel markets rise but bring them down much more slowly when wholesale costs fall.
The CMA said in September that it was “deeply concerned” about overcharging by fuel retailers but that it had yet to perform a detailed assessment of how companies were being affected by changing operating costs.
Monday’s CMA report found that fuel prices were falling, from an average of 135p per litre (ppl) for petrol and 142ppl for diesel, both down 8ppl from the previous year, due largely to lower crude oil prices, exchange rates and refining costs.
But while prices have come down between November 2024 and October this year, the watchdog found that they had not declined by as much as they could have, as non-supermarket retailers have clung on to historically high fuel profit margins.
The CMA will launch a “fuel finder” scheme next year, allowing drivers to compare pump prices in real time, including through navigation apps and price comparison websites.
Turnbull said: “We know fuel costs are a big issue for drivers, especially at this time of year with millions making journeys across the country. This is why the fuel finder scheme is crucial – it will put power back in the hands of motorists and save households money.”
The Guardian approached the Retail Motor Industry Federation for comment.