The UK's competition watchdog has accused fuel retailers of overcharging drivers, dismissing claims that high operating costs are preventing them from passing on significant savings from falling wholesale prices.
"Rocket and Feather" Pricing Blamed for High Costs
The Competition and Markets Authority (CMA) stated that motorists are being charged too much for petrol and diesel, particularly during the busy Christmas travel period. This contradicts forecourt operators' justification that increased non-fuel costs, such as wages and energy, necessitate higher pump prices.
Dan Turnbull, the CMA's senior director of markets, said the analysis shows operating costs do not explain the persistently high margins. "This indicates competition in the sector is weak – if it was working well, drivers could see lower prices at the pump," he stated.
Motoring groups the AA and RAC supported the CMA's findings. The AA highlighted that the wholesale cost of petrol has fallen by more than 7p per litre since late November. With VAT included, this should translate to a saving of 8.4p per litre, or roughly £4.60 for a typical 55-litre tank. Instead, average pump prices have dropped by less than a penny.
An AA spokesperson criticised the practice, calling it "classic 'rocket and feather' pricing at the pumps", where prices shoot up rapidly when oil costs rise but descend slowly when they fall.
Persistently High Margins Despite Falling Oil Prices
The CMA's report, published on Monday, acknowledges that fuel prices are decreasing. Average petrol prices stand at 135p per litre and diesel at 142p per litre, both down 8p from the previous year, largely due to lower crude oil prices and refining costs.
However, the watchdog found that non-supermarket retailers are maintaining historically high profit margins on fuel, meaning the savings are not being fully passed on to consumers. The RAC's head of policy, Simon Williams, said the CMA had "clearly rejected" the retailers' rationale.
New Tool to Empower Drivers Coming in 2024
In response to the ongoing concerns, the CMA confirmed it will launch a national "fuel finder" scheme next year. This service will allow drivers to compare real-time pump prices via navigation apps and price comparison websites, increasing market transparency.
"We know fuel costs are a big issue for drivers, especially at this time of year with millions making journeys across the country," said Turnbull. "This is why the fuel finder scheme is crucial – it will put power back in the hands of motorists and save households money."
The CMA first expressed "deep concern" about overcharging in September but had awaited a detailed assessment of operating costs. The Retail Motor Industry Federation was approached for comment on the latest findings.
