Fuel prices remain too high, watchdog says

Drivers are still paying more for fuel than they should because of “stubbornly high” margins, the competition watchdog said.
The Competition and Markets Authority (CMA) said fuel margins remained higher than historic levels and it remained concerned about weakened competition in the sector.
Supermarket fuel margins increased from 7 per cent in April to 8.1 per cent in August; non-supermarket fuel margins rose from 7.8 per cent 10.2 per cent at the same time, the watchdog said.
The “sustained” increase in the level of fuel margins was concerning and suggested that overall levels of competition in the road fuel retail market remained weakened.
Dan Turnbull, senior director of markets at the CMA, said: “While fuel prices have fallen since July, drivers are paying more for fuel than they should be as they continue to be squeezed by stubbornly high fuel margins. We therefore remain concerned about weak competition in the sector and the impact on pump prices.
“With that in mind, we are pleased the government is progressing with our recommendations. These measures will empower drivers to find the cheapest fuel wherever they are in the UK, increase competition and support the economy. The more people save on fuel, the more they have to spend in other areas.”
The CMA said fuel prices fell from June to October, driven by global factors including crude oil costs. The average petrol and diesel prices at the end of October were 134.4p and 139.7p per litre, a decrease of 10.0p and 10.4p respectively.
The CMA also looked at the retail spread — the average price that drivers pay at the pump compared with the benchmarked price that retailers buy fuel at — from July to October.
It found that retail spreads were far above the long-term average of 5p to 10p per litre, with petrol averaging 14.9p per litre and diesel averaging about 16.3p per litre.
The CMA said retail spreads had remained above long-term averages since 2020, indicating a continued lack of competition in the sector.
Simon Williams, head of policy at the RAC, said: “It’s disappointing to hear that the CMA is still concerned about competition among fuel retailers and that margins remain higher than historic levels, especially after it announced this summer that drivers were overcharged by £1.6 billion in 2023.
“We hope the introduction of the government-backed fuel-finder scheme next year will succeed in driving greater competition and enable drivers all around the UK to benefit from fairer prices. In the meantime, cost-conscious drivers can download the free myRAC app and use it to find the cheapest fuel near them.”
The CMA recommended that the previous government launch a compulsory scheme to ensure that fuel retailers share price information to allow motorists to compare deals. Labour has since committed to the fuel-finder scheme, alongside statutory monitoring powers for the competition regulator, with the aim of introducing it by the end of next year.
The regulator launched a temporary price data-sharing scheme after its initial report in 2022 found problems in the market but it is voluntary and only covers 40 per cent of retail fuel sites across the UK.