Watchdog Reports Drivers Overpaying for Fuel Due to Elevated Retailer Margins

The competition watchdog has stated that motorists are being overcharged for fuel, attributing this to retailers’ “stubbornly high” profit margins. The Competition and Markets Authority (CMA) reported that despite a decrease in fuel prices since July, the profit margins of sellers – defined as the gap between the acquisition cost and the selling price of fuel – persist above historical benchmarks. The CMA indicated that supermarket profit margins increased from 7% in April to 8.1% in August. Conversely, the Petrol Retailers Association (PRA) asserted that sellers were setting fuel prices as “low as possible in a highly competitive market” even as they contended with rising operational expenses. However, the CMA expressed concern over the “sustained” rise in fuel prices and identified insufficient competition within the fuel market as a factor contributing to elevated costs. According to the watchdog, fuel margins for non-supermarket retailers climbed from 7.8% in April to 10.2% in August. Dan Turnbull, senior director of markets at the CMA, commented, “While fuel prices have fallen since July, drivers are paying more for fuel than they should be as they continue to be squeezed by stubbornly high fuel margins.” He further stated, “We therefore remain concerned about weak competition in the sector and the impact on pump prices,” particularly given the ongoing high cost of living. Turnbull also remarked, “The more people save on fuel, the more they have to spend in other areas”. By the close of October, the average price for petrol stood at 134.4p per litre, with diesel at 139.7p. Nevertheless, Gordon Balmer, executive director of the PRA, emphasized the importance of incorporating the escalating costs faced by retailers—specifically business rates, National Insurance, and the minimum wage—into subsequent analyses to “give a complete picture”. Luke Bosdet, the AA’s spokesman on road fuel prices, stated, “The CMA reporting that retailers continue to pump their fuel margins for extra profit will stir anger once again – particularly when set against the background of the government continuing the fuel duty freeze.” He further noted that with retailers now incurring higher National Insurance contributions, increased wages, and elevated energy bills, discerning a “reasonable addition” to fuel prices from “bloated margins” had become challenging. The motoring organization RAC described the CMA’s conclusions as “disappointing”, particularly considering the regulator’s July statement that drivers were overcharged by £1.6bn for fuel in 2023. Simon Williams of the RAC expressed, “We hope the introduction of the government-backed fuel finder scheme next year will succeed in driving greater competition and enable drivers all around the UK to benefit from fairer prices”. The fuel finder scheme, which will enable motorists to compare real-time fuel prices, is scheduled for implementation by the close of 2025. In January, the government indicated that this information, accessible via online comparison sites and navigation applications, is expected to reduce prices through enhanced transparency.