Motorists Are Paying Too Much for Fuel Due to High Sales Margins, CMA Says
The Competition and Markets Authority (CMA) has reported that UK motorists are still paying more for fuel than they should be because of “severely high” retail limits.
The organization has expressed concern over weak competition in the fuel sector, leading to higher prices at the pump.
According to CMA, fuel margins remain higher than historical levels. Supermarket gasoline consumption increased from 7% in April to 8.1% in August, while non-supermarket gasoline consumption increased from 7.8% to 10.2% during the same period. The continued increase suggests that competition in the retail fuel market remains weak.
Dan Turnbull, Chief Marketing Officer at the CMA, said: “Although petrol prices have fallen since July, motorists are paying more for petrol than they should be as they continue to be squeezed by the persistently low fuel prices. So we are still concerned about weak competition in the sector and the impact on pump prices.
“Therefore, we are happy that the government is continuing with our recommendations. These measures will give motorists the ability to find the cheapest fuel anywhere in the UK, increasing competition and supporting the economy. The more people save on fuel, the more money they have to spend elsewhere.”
The CMA noted that fuel prices fell from June to October, driven by global factors such as crude oil prices. Average petrol and diesel prices at the end of October were 134.4p and 139.7p a litre, respectively—down 10.0p and 10.4p.
However, the retail spread—the difference between the prices motorists pay at the pump and the price retailers pay for fuel—remains above the long-term average of 5p to 10p a litre. From July to October, petrol was 14.9p a liter more than average, while diesel was 16.3p a litre. This reflects the continued lack of competition in the sector as retail sales remain high as of 2020.
Simon Williams, Head of Policy at the RAC, commented: “It is disappointing to hear that the CMA remains concerned about competition between petrol retailers and that margins remain above historic levels, particularly after announcing this summer that motorists will be charged more than £1.6 billion by 2023 .
“We hope that the introduction of the government-backed petrol scheme next year will be successful in driving greater competition and enable drivers across the UK to benefit from lower prices. In the meantime, cost-conscious drivers can download the free myRAC app and use it to find the cheapest fuel near them.”
The CMA’s concerns come as drivers continue to feel that the cost of living is high. The upcoming fuel sourcing program, supported by the government, aims to increase transparency in fuel prices and encourage competition between retailers, ultimately benefiting consumers.
