Britain’s competition watchdog warns drivers across the United Kingdom are paying more than necessary for petrol and diesel, citing persistently high retailer profit margins, weak competition, and slow price cuts despite falling wholesale fuel costs.
The Competition and Markets Authority said fuel prices at the pump have not fallen in line with wholesale costs, leaving motorists facing higher bills during a busy travel period.
CMA Fuel Says Retailer Margins Remain Elevated
In its first annual monitoring report on road fuel, the CMA fuel said profit margins for both supermarket chains and independent fuel retailers remain historically high, even as wholesale petrol and diesel prices decline.
The watchdog found margins have continued to rise on a percentage basis, contradicting claims that higher pump prices are driven mainly by rising operating costs. If costs were the primary factor, margins would fall rather than remain elevated, the CMA said.
“The evidence suggests competition is not working as well as it should,” the regulator said, adding that drivers are unlikely to be seeing the full benefit of lower wholesale prices.
The CMA fuel described competition in the UK road fuel market as “weak,” saying limited pressure between retailers allows higher prices to persist. As a result, reductions in wholesale costs are not being passed on to consumers quickly or consistently.
Motoring Groups Highlight Growing Price Gap
Motoring organizations echoed the watchdog’s concerns, pointing to a widening gap between wholesale fuel prices and what drivers pay at the pump.
The AA said wholesale petrol costs have fallen by more than seven pence per liter since November, while average pump prices have dropped by less than one penny over the same period.
“That gap suggests retailers are taking drivers for a ride,” an AA spokesperson said, particularly as families travel more during the Christmas season.
The RAC also raised concerns about ongoing regional price differences, with drivers in some areas paying significantly more than those elsewhere for the same fuel. The group said the lack of transparency makes it difficult for consumers to shop around effectively.
“Drivers deserve confidence that prices reflect real costs, not inflated margins,” the RAC said.
Government Prepares Fuel Finder Price Tool
In response to the findings, the UK government is preparing to roll out a “fuel finder” scheme aimed at boosting transparency and competition.
Under the plan, fuel retailers will be legally required to report price changes within thirty minutes of them taking effect. The data will be published in real time and made available through mobile apps, websites, and satellite navigation systems.
The CMA fuel said greater transparency should encourage retailers to compete more aggressively, making it easier for drivers to find cheaper fuel nearby and putting downward pressure on prices.
The watchdog has been granted enforcement powers to ensure compliance with the scheme, including the authority to issue fines to retailers that fail to report prices accurately or on time.
Motoring groups welcomed the move, saying consistent scrutiny and accessible price data could finally address long-standing concerns about uneven pricing.
The CMA fuel said it will continue to monitor the sector closely to assess whether the new measures lead to fairer pricing for millions of drivers nationwide.
Visit Oil Gas Energy Magazine for the latest information.
