Fuel retailers continue to pocket higher-than-normal margins on every liter of petrol and diesel sold to drivers, after an investigation by the competition watchdog found they had jacked up their prices to the detriment of hardened motorists.
Motorists were hit by ‘significant increases’ in operators’ margins in September and October when calculating the differences between pump and wholesale prices 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 pump’.
A new update from the Competition and Markets Authority says motorists were hit by ‘significant increases’ in fuel retailer margins in September and October, despite the watchdog’s recent investigation into the sector, which accused operators of jacking up their prices increased.
The CMA’s update published today said: ‘In September and October we have seen significant increases in retail spreads (margins) for both petrol and diesel.
‘In both cases, the retail spread at the end of October was well above the long-term average.
“While retail spreads will widen and fall in response to wholesale price volatility, we expect these spreads to return to normal levels.”
The report, which is part of the CMA’s commitment to continue monitoring the retail road fuels market, continues: ‘If retail spreads were to remain at these levels for much longer, this would raise concerns about the intensity of retail competition in the sector. ‘
The research also found that supermarket fuel margins in 2023 will be higher on a percentage basis than previous years, although on a pence per liter (ppl) basis they will be slightly lower in 2022 due to lower wholesale costs.
However, since August, supermarkets have been posting higher margins than the pre-2021 average, and these increased further in September and October.
Yet supermarkets are again the cheapest shopping centers to refuel, based on data from May to September. The report adds that there are ‘fewer cases where non-supermarket retailers are cheaper than the supermarket average’.
The watchdog said that worrying signals are continuing to emerge from the road fuel retail sector and that it will be monitoring prices to see if there is further evidence of ‘rocket-and-feather’ prices (when increases in wholesale prices trigger immediate increases in pump prices, but falling wholesale costs are not so quickly reflected at petrol stations) in the run-up to the busy Christmas period.
Luke Bosdet, from the AA, said it is unacceptable that retailers are failing to pass on the savings from lower wholesale costs to struggling motorists, their families and businesses in a cost of living crisis.
He added that the government must accelerate legislation creating the legal system for fuel price transparency – something recommended as part of the CMA’s first inquiry into the sector published earlier this year.
‘The AA has tested public responses to profiling the cheapest pump prices in an area or along a route. “The feedback from drivers is that they want more transparency,” he said.
The RAC also weighed in on road fuel retailing, saying the CMA’s latest findings were ‘very disappointing’ and show that ‘drivers continue to be abused at the pumps’.
It recently accused Britain’s biggest fuel companies of charging an extra 5p for every liter of petrol sold to drivers similar to companies that pocket government money Shortly after Russia’s invasion of Ukraine last year, a 5 cent tax cut was introduced to help struggling families cope with cost of living pressures.
Simon Williams of the RAC said: ‘It is very disappointing that the CMA has found that major fuel retailers are still taking much larger margins than they have in the past, something we have been saying for a long time, because this means that drivers are still being continued to abuse the pumps.
‘While supermarket margins may have fallen over the summer, our latest data shows they have more than made up for this since and are currently operating very high margins.
‘Despite this summer’s CMA report, the largest retailers now voluntarily publish their prices every day for app makers to use, but our data shows this has had no effect whatsoever on improving competition and driving down prices . In fact, we believe that the situation is currently worse than ever, as the wholesale fuel market has fallen significantly, while prices at petrol stations are falling like a proverbial spring.
‘It is crystal clear to us that a price control body – as recommended by the CMA – is desperately needed as major retailers cannot be trusted to price fuel fairly for their customers.
‘But unless this body has the power to take action against major retailers who fail to cut prices quickly enough in a declining wholesale market, we fear that even then little will change.’
Gordon Balmer, executive director of the Petrol Retailers’ Association which represents independent petrol stations in the UK, also responded to the report, telling This is Money: ‘We are pleased to see the in-depth participation in the CMA’s interim fuel price transparency programme. to see. We will continue to work closely with the CMA as they develop their permanent scheme.
‘With the volatility of the global fuel market, it is important that motorists are given the opportunity to shop for the cheapest prices available to them. As always, I encourage motorists to shop around to find the best possible deals.”
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