CMA Raises Concerns Over Continued High Fuel Prices Amid Weak Competition

The UK’s Competition and Markets Authority (CMA) has expressed concerns that UK drivers are still paying more for fuel than necessary due to “stubbornly high” retail margins and weakened competition within the fuel sector.

Despite a fall in global fuel prices, the CMA reports that fuel margins remain above historical norms, which is keeping pump prices inflated. The watchdog noted that supermarket fuel margins had risen from 7% in April to 8.1% in August, while non-supermarket fuel margins grew from 7.8% to 10.2% during the same period. This suggests that competition among fuel retailers is still lacking, contributing to higher prices for consumers.

Dan Turnbull, Senior Director of Markets at the CMA, said: “While fuel prices have fallen since July, drivers are paying more for fuel than they should be due to stubbornly high fuel margins. We remain concerned about weak competition in the sector and its impact on pump prices.”

He also welcomed government progress on implementing recommendations aimed at increasing transparency in fuel pricing. These measures, Turnbull believes, will allow drivers to find the cheapest fuel in their area and stimulate competition within the market, ultimately benefiting consumers.

The CMA’s report highlights that, while fuel prices declined between June and October, largely due to falling global crude oil prices, the retail spread—the difference between the price consumers pay at the pump and the price retailers pay for fuel—remains high. In fact, between July and October, petrol was priced 14.9p per litre above the benchmark, and diesel was 16.3p higher. The CMA notes that the long-term average retail spread is typically between 5p and 10p per litre, indicating ongoing market inefficiencies.

Simon Williams, Head of Policy at the RAC, expressed disappointment that the CMA’s concerns about fuel retailer competition persist, especially after it was revealed that drivers were overcharged by £1.6 billion in 2023. Williams emphasized the importance of the upcoming government-backed fuel-finder scheme, which he hopes will encourage more competition and provide drivers with fairer fuel prices.

In the meantime, the RAC suggests that cost-conscious drivers use the free myRAC app to help find the cheapest fuel near them.

The CMA’s investigation underscores the continued pressure on UK drivers, who are already grappling with high living costs. The government’s new fuel-finder initiative, set to launch next year, aims to increase price transparency and drive competition in the fuel sector, with the goal of benefiting UK consumers at the pump.