Urgent review of fuel market ordered
Kwasi Kwarteng, secretary of state for the Department for Business, Energy & Industrial Strategy (BEIS), has written to Andrea Coscelli, chief executive of the Competition and Markets Authority (CMA) calling for an urgent review of the fuel market.
In the letter, Kwarteng wrote that unique circumstances globally, including Russia’s illegal invasion of Ukraine as well as economies “unlocking” after Covid, have pushed pump prices to “unprecedented levels”.
In March’s Spring Statement, the government announced a 5p a litre fuel duty cut amid soaring pump prices, but Kwarteng wrote: “Despite this action, there remains widespread concern about the pace of the increase in prices at the forecourt and, that prices may not fall as much or as fast as they rise.
“The British people are rightly frustrated that the £5bn package does not always appear to have been passed through to forecourt prices and that in some towns, prices remain higher than in similar, nearby towns.”
The business secretary added that drivers “should be getting a fair deal for fuel across the UK”.
“Healthy competition between forecourts is key to achieving this, with competition working to keep pressure on prices. For these reasons, I am writing to you to ask that the CMA conduct an urgent review of the fuel market, as well as a longer-term market study under the Enterprise Act 2002, to explore whether the retail fuel market has adversely affected consumer interests.
“This should consider the health of competition in the market, geographical factors, including localised competition, and any further steps that the Government or the CMA could take to strengthen competition, or to increase the transparency that consumers have over prices. As part of this, I would be grateful for the CMA’s advice on the extent to which competition has resulted in the fuel duty cut being passed on to consumers, and the reasons for local variations in the price of road fuel”, he wrote.
Coscelli responded: “The CMA will, as you request, carry out a short and focused review of the market, and provide advice to government on steps that might be taken to improve outcomes for consumers across the UK.
“Once our short review is complete, and taking into account its findings, the CMA Board will consider what further work may be necessary, including whether a market study is appropriate.”
Pump prices soar
Last week was a record-breaking week for pump prices, with fuel costing 7p more from the beginning compared to the end of the working week. It also meant prices broke the three-figure threshold, as it now costs over £100 to fill up the average 55-litre family car.
According to the latest RAC Fuel Watch data, it costs an average 183.16p per litre for unleaded, while diesel drivers face an average 188.82p per litre to fill up.
Jack Cousens, head of roads policy for the AA, said; “We are pleased the CMA has been tasked to report on the cost of fuel however, more urgent action is needed.
“To relieve pressure at the pumps we need an immediate 10p cut to Fuel Duty. That would help restore some balance ahead of the initial CMA findings due in early July.
“Longer term, the CMA should consider extending the pump price transparency available in Northern Ireland to the rest of the UK. The Consumer Council’s Fuel Price Checker stimulates competition and has led to drivers there enjoying the lowest fuel prices in the UK.”