Fuel retailers hang onto high margins, in spite of competition warnings

Fuel retailers in the UK are continuing to cling onto the higher profit margins they introduced on the back of the Russia/Ukraine oil price shock. This comes in spite of the UK competition watchdog’s recent report exposing the £1.6 billion extra coughed up by drivers at filling stations last year. 

Fuel price data for July 2024 - when the Competitions and Markets Authority (CMA) announced the shocking cost to motorists of greedy filling station profiteering throughout 2023 - shows prices on forecourts remaining ‘stubbornly high’, according to RAC Fuel Watch. 

While wholesale prices merit cost-savings being passed onto drivers, the failure of major retailers to respond means the RAC calculates we’re paying 5p a litre too much for petrol, and 8p a litre extra for diesel - that averages out at between £2.75 and £4.40 every time you fill up.

Far from coming down though, the data shows that average retailer margins rose 3p per litre to 13p for petrol and 14.5p for diesel in July, both well above the long-term average of 8p per litre. If retailers reverted to that long-established standard, we’d be paying £1.40 per litre for petrol and £1.42 for diesel.

In fact, that is what drivers are paying in Northern Ireland, where margins are between 5p and 8p cheaper per litre than the UK average, the RAC says.

Further analysis of the data shows supermarkets owned by the big four brands had prices on average 3p lower than the average UK price, but with some big disparities between sites. Asda costs varied by as much at 18p a litre (excluding motorways), while the variance at Tesco forecourts was 7p in July.

Meanwhile, although three of the major supermarkets offered price data to the CMA’s price data scheme on a daily basis in July, the RAC alleges that Asda only submitted data intermittently, covering just 12 days of the month. While the data scheme is voluntary, it’s a precursor to a new ‘pumpwatch’ scheme that will bring live price updates for consumers, which the government is due to roll out soon.

“With our analysis clearly showing margins are still significantly above the long-term average, it seems like nothing has changed and drivers continue to lose out despite all the ongoing scrutiny from the CMA and the Government,” says RAC head of policy Simon WIlliams.

“Coupled with this, the wholesale fuel market is trending lower due to the price of oil falling by $6 to around $80 at the end of July. This in itself ought to lead to lower prices at the pumps but, as the CMA made clear in its report, competition in fuel retailing is extremely weak. As a result, we sadly can’t see pump prices reducing much further without retailers’ acting on what the CMA is saying and finally introducing some much-needed fairer pricing strategies.

Howard Cox, the founder of FairFuelUK was more hard hitting in his response. “Drivers continue to be ripped off at the pumps, and yet another Government allows greedy fuel supply businesses to get away with dishonest pricing. Diesel, in particular, is subject to targeted higher unchecked profit-taking. Petrol and diesel wholesale prices are virtually the same today at £1.21 per litre, but retail diesel averages 5p more at £1.49 per litre”, says Cox.

"When are our clueless elected national politicians to wake up to the UK’s 37m drivers and our struggling economy needlessly being hit with some of the highest pump prices in the world?

What are fuel prices in your area? Let us know in the comments below...