The UK’s competition watchdog has announced it will undertake a “short and focused review” into petrol station pricing, after a week of pain at the pumps.
This follows Business Secretary Kwasi Kwarteng writing a letter to the Competition and Markets Authority (CMA) amid concerns retailers are pocketing fuel duty cuts rather than passing them on to customers.
He urged them to investigate the health of competition in the market and whether the five pence fuel duty cut unveiled by the Chancellor Rishi Sunak three months ago is being properly passed on to consumers.
The CMA noted that “high road fuel prices are causing significant concern for the millions of consumers and businesses who rely on being able to afford to fill up their vehicles” and said it will “provide advice to government” on steps to improve outcomes for consumers across the UK.
It said: “Once our short review is complete, and taking into account its findings, the CMA Board will consider what further work may be necessary, including whether a market study is appropriate.”
Soaring petrol and diesel prices has put pressure on the government to intervene, with record fuel costs deepening the cost-of-living crisis facing millions of Brits this year.
Overall, fuel prices climbed over seven pence last week, rising more than one pence a day amid a record rally – powered by historically high oil prices which are hovering around $120 per barrel.
Unleaded petrol prices jumped to a record high yesterday, going above 185p per litre for the first time – trading on average at 185.04p, while diesel remained elevated at 190.92p per litre, having reached an all-time high of 191.03p last Saturday.
A year ago, petrol averaged 130.53p a litre and diesel 132.93p, making fuel respectively 54.51p and 57.99p a litre more expensive than a year ago.
The cost of filling the typical 55-litre car tank is now £29.98 dearer than a year ago (£71.79 versus £101.77).
Petrol remains the primary fuel source powering British vehicles, while diesel remains the choice of fuel for most business vehicles, raising the risk of further price hikes for goods and deliveries.
The RAC has previously accused petrol retailers of taking 2p per litre from the margins of fuel than before the fuel duty cut , however the motoring group argued wholesale costs remain the key driver of prices.
RAC fuel spokesperson Simon Williams said: “In a rising market, such as we’re experiencing in now, it’s very different in that retailers are constantly having to put up their prices to reflect the fact their costs are increasing every time they buy new stock. Since Russia invaded Ukraine on 24 February the wholesale price of petrol has gone up by 28%. This is why the government’s five pence March duty cut has had little effect, whether or not it’s been fully passed on by retailers, and why they need to go further now to help drivers.”
Meanwhile the AA has noted that the wholesale price of petrol heading to the forecourts has been lower than its pre-Jubilee peak for more than 10 days.
“Petrol price rises should be grinding to a halt, at least temporarily, by the end of the week. There may still be some forecourts yet to pass on the recent surge in costs,” says Luke Bosdet, the AA’s fuel price spokesman.
“If they continue to go up substantially afterwards, we will be intrigued to hear what excuses the fuel trade has this time. If prices keep going up, they will give the government further justification in its call to the Competition and Markets Authority for an investigation.