Thanks to high profit margins from retailers, motorists paid an extra £1.6bn during 2023 to fill up their tank, the Competition and Markets Authority (CMA) found.
This comes as retail margins leading up to April 2024 for supermarkets doubled on the levels recorded just five years ago.
While those margins charged by supermarkets are at record highs, in the four months between January and April, they in fact dipped from 8.1% to 7%.
The profit margins retailers are banking have long been an issue raised by the CMA in its three reports to date. In May, it described the difference in what supermarkets pay for petrol compared to what they charge customers as “unfair”.
On average, the difference between what motorists paid for fuel compared to what retailers paid for it was 12p per litre.
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The competition to improve this situation is also “failing its customers”, the CMA noted in its third interim monitoring update of fuel costs.
Petrol prices may have eased recently, dropping to 147.88pence per litre (ppl) in May, but motorists in the UK – the most expensive place in Europe for fuel – are still not getting a fair deal, according to many motoring service experts.
This time last year, the CMA published a report into the fuel sector and slammed the “weak competition” that allowed retail giants to reap the rewards of high fuel costs.
Last year, due to the Russian invasion of Ukraine, the cost of wholesale fuel increased, which led to a price hike at the pumps.
However, since the prices have eased, it has not been replicated on the forecourts of the ‘top four’ petrol supermarket retailers in the UK – Asda, Morrisons, Tesco and Sainsbury’s.
To combat the lack of competition in the market, the CMA suggested a new fuel finder scheme to help drivers access live price updates for petrol and diesel.
Since the change of Government, the regulator has called on those recommendations to be actioned as soon as possible. This price checker was previously promised to be ready by the end of this year.
Sarah Cardell, chief executive of the CMA, said: “Last year, we found that competition in the road fuel market was failing consumers, and published proposals that would revitalise competition amongst fuel retailers. One year on and drivers are still paying too much.
“We want to work with the Government to put in place our recommendation of a real-time fuel finder scheme to kick-start competition among retailers. This will put the power in the hands of drivers who can compare fuel prices wherever they are, sparking greater competition.”
Extra £1.6bn ‘nothing short of outrageous’
Following the report, Simon Williams, RAC‘s head of policy, says the third report from the CMA “contains many findings that we feared.”
Williams described the extra £1.6bn paid by drivers as “nothing short of outrageous, especially when so many are dependent on their vehicles.”
He said: “Drivers have every right to feel ripped off, especially knowing there is virtually no market competition between retailers.
“The report is, once again, a confirmation of what we have known and been campaigning against for many years. Our analysis has long shown that even accounting for retailers’ increased operating costs, margins on fuel are at extremely questionable levels.”
Williams added: “The CMA couldn’t be any clearer about what needs to happen. We have already written to the new energy secretary, urging him to implement its recommendations as quickly as possible.
“This means greater transparency of fuel prices from all retailers and, most importantly of all, a price monitoring body that can take decisive action on retailers whenever drivers are overcharged. This can’t happen soon enough.”
