UK motorists are paying more than they should for petrol and diesel even as global energy market prices have fallen in recent months, the competition watchdog has warned.
The Competition and Markets Authority (CMA) repeated its call for the new government to take action “as soon as possible” to end the “persistent” overcharging, six months after it found that motorists paid £1.6bn more than they should have last year alone.
The CMA’s latest report, released on Thursday, found that “weak competition” in the market meant that retailers had not passed on the falling cost of energy, even as global oil prices have weakened in recent months.
The report analysed energy costs over the summer, when benchmark oil prices fell from an average of almost $90 a barrel in April to an average of just over $80 a barrel in August, in part due to weaker demand for crude from China and rising oil production in the US.
Dan Turnbull, a senior director 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.”
The margins made by retailers – or the difference between what a retailer pays for its fuel and what it charges its customers – remain at historic levels, according to the CMA. It found that fuel margins at supermarkets rose from 7% in April to 8.1% in August, while non-supermarket fuel margins also increased from 7.8% to 10.2% in the same period.
“We therefore remain concerned about weak competition in the sector and the impact on pump prices,” Turnbull said. The CMA said the persistence in elevated margins emphasised the importance of implementing its recommendations to government “as soon as possible”.
The AA motoring group described the findings as “depressing” and warned that pump prices were beginning to rise heading into winter. The average petrol price climbed to 135.9p a litre this week, or more than 2p higher than the low point in October, according to the AA.
Luke Bosdet, the AA’s spokesperson on road fuel prices, said: “Wholesale costs have gone back up to levels seen in late September yet petrol’s current average pump price has not only increased in line but risen further. The fuel trade clearly faces overhead pressures from higher wages, national insurance contributions and increased electricity bills. However, the key question is what is a reasonable addition to the pump price to cover that?”
after newsletter promotion
The CMA has called on the government to ensure greater transparency of fuel prices from all retailers and to create a price monitoring body that can take decisive action on retailers whenever drivers are overcharged.
“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,” Turnbull said.