Business Secretary Kwasi Kwarteng has ordered the market watchdog to conduct an “urgent review” of the petrol market, amid concerns retailers are pocketing fuel duty cuts rather than passing them on to customers.
He has written to the Competition and Markets Authority (CMA), urging them to investigate the health of competition in the market and whether the fuel duty cut is being properly passed on to consumers.
The minister instructed the CMA to “increase the transparency that consumers have over prices”, seeking their advice on both the fuel duty cut and reasons for local variants in prices of road fuel.
Earlier this year, Chancellor Rishi Sunak unveiled a five pence fuel duty cut as the flagship policy in the Spring Statement to ease pressure on motorists.
However, with petrol prices spiking at the pumps to record levels, consumers have not felt the benefit of the pledged cuts.
Kwarteng said: “The British people are rightly frustrated that the £5bn package does not always appear to have been passed through to forecourt prices and that in some towns, prices remain higher than in similar, nearby towns.”
Earlier this week, petrol and diesel prices peaked at 183.16 per litre and 188.82 per litre respectively, with prices rising as much as seven pence per week.
The average cost at motorway services for a full litre of diesel has passed the £2 mark for the first time ever, while the cost filling up a 55-litre tank of petrol climbed over £100 this month.
This reflects soaring oil prices which remain elevated above $120 per barrel on both major benchmarks, amid fears of supply shortages following Russia’s invasion of Ukraine, and rebounding post-pandemic demand.
The CMA has confirmed it “stands ready to take action” if there is evidence market competition is not working properly, and that it understands the recent rises in fuel prices “will be hugely worrying for millions of drivers across the UK.”
Chief Executive Andrea Coscelli told City A.M.: “We will engage with industry, motoring organisations and the government to ensure our advice to the Business Secretary is based on the facts. Anyone with evidence of competition issues, collusion, or other illegal anti-competitive behaviour, should get in touch with us.”
RAC pushes for VAT cuts to ease pressure on motorists
Last month, Department for Transport officials were tasked with drawing up proposals to “expose” retailers failing to pass on the cuts, according to The Telegraph.
The newspaper revealed that Prime Minister Boris Johnson is open to naming and shaming retailers that overcharge customers.
Tom Hatton, head of product management at analytics group Kalibrate told City A.M. retailers have not been profiteering, but are instead ramping up prices for consumers in line with higher wholesale costs more quickly than they did in the past.
He argued the fuel vendors are more cautious about pricing amid soaring oil prices and geopolitical volatility.
Motoring group RAC has previously criticised fuel retailers for taking 2p per litre more in profit than they did before the fuel duty cut was announced.
However, it is now calling for more dramatic interventions in the market, and has urged the government to reduce VAT rather than being “fixated on ensuring retailers are passing on March’s 5p duty cut fully.”
It noted that the government is taking 30p in VAT from every litre sold alongside the 53p fuel duty.
RAC fuel spokesperson Simon Williams said: “The government is ignoring the fact that wholesale costs of fuel have absolutely rocketed since then with petrol having gone up 24 per cent, or around 30p per litre, and it’s these higher costs that are driving the current increases at the pumps. It needs to recognise that the 5p duty cut is therefore a drop in the ocean and more needs to be done now to support drivers who are feeling the pain every time they go to fill up their cars.”
Meanwhile, there are reports that ultra-high petrol prices are fuelling a crime spree at the pumps, as Brits increasingly struggling to pay for the petrol and diesel to fill up their cars.
Non-payment methods such as driving away or pretending not to have a a wallet have gone up 39 per cent since January, according to data from Forecourt Eye.