Fuel prices still cause for concern, warns competition watchdog

Drivers are still not getting a fair price on fuel at the pumps, the UK’s competition watchdog has warned.

The Competition and Markets Authority (CMA) said prices had risen by as much as 13.9p per litre since the end of May, partly due to wholesale costs.

But it said, more recently, while those costs have fallen, the retail price for petrol and diesel has not.

CMA boss Sarah Cardell said there was “cause for concern” that competition is not working.

The findings are contained in the watchdog’s first report on fuel prices following an investigation into competition in the market, which recommended a body be created to monitor what retailers are charging drivers.

The CMA found that petrol prices had increased from 142.9p per litre at the end of May to 154p per litre at the end of October, up 11.1p.

For diesel, prices rose from 147.9p per litre to 161.8p per litre over the same period, an increase of 13.9p.

Wholesale oil prices rose between June, July and August, said the CMA, largely due to global pressures on the energy market.

But it said: “Wholesale prices then reduced in September and October while retail prices did not.

“While it is too early to draw definitive conclusions, this could indicate a lack of competitive response from fuel retailers if this trend continues.”

Higher food and fuel prices have been big drivers in the soaring cost of living and official figures also suggest that the price paid by drivers at the pump rose sharply in September.

The CMA examined the so-called “retail spread” – the difference between what retailers pay to buy fuel and the price consumers are charged – between May and last month.

It discovered that there had been “significant increases” in the retail spread for petrol and diesel.

‘Cause for concern’

“More recent trends give cause for concern that competition is still not working well in this market to hold down pump prices,” said the CMA’s Ms Cardell.

She cautioned, however, that the information contained in the report is based on voluntary information and is missing some big fuel retailers.

Off the back of its investigation into the fuel market in the UK, the watchdog is calling for a new monitoring body to be created, which would have powers to demand pricing information from all retailers.

The RAC said that the latest figures suggested that drivers were still “being taken advantage of at the pumps”.

The RAC’s Simon Williams said: “It’s very disappointing that the CMA has found that major fuel retailers are still taking far bigger margins than they have done in the past.

“We believe the situation is currently worse than ever as the wholesale fuel market is down significantly, yet forecourt prices are falling like the proverbial feather,” he said, adding that any new body responsible for tracking prices would need to have the power to take action against big retailers.

“We fear little will change even then,” he said.

Gordon Balmer, executive director of the Petrol Retailers’ Association, said that he would always encourage drivers to shop around to make sure they are getting the best deal.

“With the volatility of the global fuel market, it is important that motorists are given the opportunity to search for the cheapest prices available to them,” he said.

The trade association also said that it would work closely with the competition watchdog on developing the new scheme for monitoring prices.