The UK energy secretary has accused fuel retailers of using motorists as “cash cows” after a consumer watchdog found that drivers were paying more for petrol and diesel than before the Covid pandemic because of “weakened” competition.
The Competition and Markets Authority (CMA) said that “due to a decision by the traditional price leaders to compete less hard”, prices had risen since 2019.
The watchdog’s study found that the average annual supermarket fuel margins had increased significantly from 2019 to 2022, representing a 6p-a-litre increase – equivalent to £900m in extra costs in 2022
Retailers will now be forced by law to provide live pricing data, allowing drivers to more easily shop around for the best deals.
Grant Shapps, the energy secretary, said: “Some fuel retailers have been using motorists as cash cows – they jacked up their prices when fuel costs rocketed but failed to pass on savings now costs have fallen.
“It cannot be right that at a time when families are struggling with rising living costs, retailers are prioritising their bottom line, putting upwards pressure on inflation and pocketing hundreds of millions of pounds at the expense of hardworking people.”
In May, the CMA said it had found evidence that retailers were putting up petrol and diesel prices to unnecessarily high levels and that it would speak to supermarkets, which have traditionally offered the lowest prices.
In concluding a study into the road fuel market, the CMA said consumers were paying “generally higher prices” than four years ago and noted that “competition has been significantly weaker on diesel than on petrol”.
The remarks came at the end of a year-long investigation in which the watchdog studied margins in the fuel market, where prices last year rose to record levels as Russia’s invasion of Ukraine upended commodity markets.
The CMA said consumers in different areas were paying “significantly” more for fuel than others, and that customers without access to fuel cards paid far more to buy fuel on the motorway than off it.
To address these issues, the watchdog suggested the launch of an “open-data fuel-finder scheme” and a separate fuel monitoring body within government.
In response, the government immediately said it would adopt the measure to force retailers to provide live price information to third parties, “paving the way for them to create price comparison apps and websites”.
The watchdog published an image of what a fuel finder may look like, allowing drivers to search by fuel type, distance and retail brand to find the cheapest price a litre and integrate the technology with their map or satellite navigation system.
The CMA also recommended that the government tasks a public body – potentially the watchdog itself – to monitor fuel prices. It believes that it would discourage retailers from the “reputational risk” of outsized margins and would provide greater transparency. The government said this would happen but it has yet to decide which body will handle the task.
A separate voluntary scheme encouraging fuel retailers to disclose prices will launch next month. The government said a similar scheme in Germany had “boosted competition among fuel retailers”.
The chancellor, Jeremy Hunt, said: “It isn’t fair that businesses are refusing to pass on lower prices to protect their profits while working people struggle with balancing their budgets.”
The AA noted that retailers had failed to quickly pass on falling wholesale prices after Hurricane Katrina in New Orleans, US, when prices rose in 2005.
Luke Bosdet, the AA’s spokesperson on pump prices, said: “Sadly, it has taken more than 15 years for a government and competition watchdog to recognise this and do something about it. However, action that is better late than never is greatly appreciated by motorists across the UK.”
Bosdet said a fuel finder scheme would be a “huge leap forward” to ensure fair pricing. He added: “A road fuel regulator will also be a big benefit but will take time to set up.
“Drivers can ill afford to wait any longer for effective pump-price competition, given that the summer getaway is about to start and motorists must run the gauntlet of overpriced motorway fuel.”
Separately, the watchdog issued two £30,000 penalties to Asda, claiming it failed to respond completely to a request for information and that one of its employees was unable to fully explain documents relating to Asda’s fuel pricing and how its takeover by Bellis, jointly owned by the Issa brothers and the private equity firm TDR Capital, have affected its approach. In May, Asda announced it would acquire the sister fuel business EG Group for £2.27bn.
