The Competition and Markets Authority (CMA) has issued an interim report expressing concern over high fuel margins, which continue to inflate pump prices for motorists across the UK. The report, published on November 28, 2024, highlights that although fuel prices have fallen slightly since the summer, they remain artificially high due to stubbornly elevated margins in the road fuel retail market.
Fuel margins, which represent the difference between the price retailers pay for fuel and the price they charge customers, are still above historic levels. Supermarket fuel margins increased from 7.0% in April to 8.1% in August 2024, while non-supermarket fuel margins grew from 7.8% to 10.2% over the same period. This persistent rise in fuel margins signals that competition in the fuel retail sector remains weak, according to the CMA.
“While fuel prices have decreased slightly since July, drivers are still paying more than they should be because of these high fuel margins,” said Dan Turnbull, Senior Director of Markets at the CMA. “We remain concerned about the lack of competition in the sector and the ongoing impact on consumers at the pump.”
The report also noted that, despite a decrease in retail fuel prices for both petrol and diesel from June to October 2024—reflecting changes in crude oil prices and refining spreads—the retail spreads, which are the additional costs drivers pay over the benchmark wholesale price, have remained high. In October 2024, petrol averaged 14.9 pence per litre (ppl) above wholesale prices, and diesel averaged 16.3 ppl, both figures well above the long-term average of 5-10 pence.
The CMA’s investigation into the road fuel market continues to point to an ongoing lack of competitive pressure on retailers, with retail spreads above historical norms since 2020. While these spreads can fluctuate due to wholesale price volatility, they have not returned to their typical range, indicating that competition is still insufficient.
As part of its ongoing efforts to improve market conditions, the CMA is encouraging the government’s commitment to implementing a new fuel monitoring function and the ‘Fuel Finder’ scheme. These initiatives aim to empower consumers by allowing them to compare real-time fuel prices, potentially driving greater competition and lower prices. The government has pledged to launch the ‘Fuel Finder’ scheme by the end of 2025, pending necessary legislative changes.
“The Fuel Finder scheme will enable drivers to easily locate the cheapest fuel prices wherever they are in the UK, helping to increase competition and ultimately reduce prices,” Turnbull added.
The new monitoring function and fuel comparison tools are set to be implemented in early 2025, once the Digital Markets, Competition and Consumers Act 2024 comes into effect. Until then, the CMA has been using voluntarily provided data from major fuel retailers, including Asda, BP, Tesco, Shell, and others, to track price movements and fuel margins.
These measures aim to give consumers more power in the marketplace and help ensure that fuel prices remain competitive, benefiting drivers and the broader economy by enabling savings that can be spent elsewhere.
Source: https://www.gov.uk/government/news/high-fuel-margins-continue-to-inflate-pump-prices-for-motorists
