Drivers are still paying more for fuel than they should be due to “stubbornly high fuel margins”, the UK’s competition watchdog has warned.
The Competition and Markets Authority (CMA) warned that fuel margins remain higher than historic levels although fuel prices have fallen since July.
And the watchdog said that it remains concerned about weak competition in the fuel retail sector and the impact on pump prices.
Fuel margins of retailers – the difference between what a retailer pays for its fuel and what it sells at – remain around the high levels seen during the CMA’s road fuel market study, according to the latest interim report.
Supermarket fuel margins increased over the May to August 2024 period, up from 7.0% in April to 8.1% in August. Non-supermarket fuel margins also increased from 7.8% in April to 10.2% in August.
The CMA also looked at the retail spread – the average price that drivers pay at the pump compared to the benchmarked price that retailers buy fuel at – over July to October 2024.
Retail spreads were above the long-term average of 5-10 ppl, with petrol averaging 14.9ppl and diesel averaging around 16.3ppl. Retail spreads have been above long-term averages since 2020, indicating an ongoing lack of retail competition in the sector.
RAC head of policy Simon Williams said the latest findings were “disappointing”, especially after the CMA announced this summer that drivers were overcharged by £1.6bn in 2023.
He added that the introduction of the government-backed fuel finder scheme next year could drive greater competition.
The scheme, recommended by the CMA after its road fuel study in July 2023 also found drivers had overpaid for fuel, will give access to live, station-by-station fuel prices on phones or satnavs.
The fuel finder scheme is being backed by a new ‘fuel monitor’ oversight body. Both recommendations were accepted by the then-government and the fuel monitor body is currently being consulted on.
Dan Turnbull, senior director of markets at the CMA, said: “These measures will empower drivers to find the cheapest fuel prices 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.”
