Supermarkets recorded margins of 4% in 2017, which increased to 7.6% in 2022 and 7.8% in 2023, while for other retailers, margins were 6.4% in 2017, increasing to 7.3% in 2022 and 9.1% in 2023
High fuel margins are “not a good sign for drivers”, the competition watchdog has said.
The Competition and Market Authority (CMA) revealed that retailers’ fuel margins, which is the difference between what they pay for their fuel and the price they sell it at, remain at the high levels seen during its market study in 2022. It found that supermarkets recorded margins of 4% in 2017, which increased to 7.6% in 2022 and 7.8% in 2023.
For other retailers, margins were 6.4% in 2017, increasing to 7.3% in 2022 and 9.1% in 2023. The CMA said its latest findings gave a “strong indication of competition issues” in the sector. It also stated that the sustained increase in the level of fuel margins was “concerning”.
The report covers fuel prices at the pump from the end of October last year to the end of February this year. From late October to late January, petrol prices fell by approximately 14 pence per litre (ppl), to 139.39 ppl, but between January and late February fuel prices had edged up by around 5ppl to 144.73 ppl.
Diesel prices dropped by 14p per litre to 147.93p from late October to late January, but then went up over 6p to 154.53p by the end of February. This was partly because of things happening around the world that affect crude oil prices. The CMA checked out how much more drivers pay for fuel compared to what it costs the retailers. From November 2023 to February 2024, they found out that the price was higher than the usual 5-10p per litre.
Petrol was about 15.2p more and diesel was about 15.15p more. This is even more than before, as the CMA’s last report said the extra cost was 12.3p for both petrol and diesel from May to the end of October.
Dan Turnbull, who works at the CMA, said: “Drivers are feeling the pinch as fuel prices have been edging up since January. We’re particularly concerned by high margins which indicate weakened competition and are not a good sign for drivers. Today’s report reinforces the need for Pumpwatch and statutory powers to be in place as soon as possible, to ensure competition is effective in this market and to get a better deal for UK drivers.”
Simon Williams from the RAC said: “We have long flagged the problem of some retailers inflating their margins on fuel, which has been to the severe detriment of drivers who are already having to cope with wider spiralling motoring-related costs. It’s extremely encouraging to see the Competition and Markets Authority keeping a close eye on this as it should make retailers think twice about upping their margins.”
“We have recently provided our recommendations on what the fuel price monitoring function should track to best benefit drivers every time they fill up. We now need to ensure that this once-in-a-generation opportunity of guaranteeing fairer fuel prices isn’t missed.”
