Petrol prices up by at least 11p per litre since May: CMA

The first monitoring report on road fuel by the Competition and Markets Authority (CMA) has shown that prices at the pump have gone up by over 11p per litre while the wider data gathered on margins and spreads shows a mixed picture.

In July 2023 the regulator recommended a monitoring body be established to report on the state of the road fuel market as a part of proposals to revitalise competition in the road fuel market. The government accepted the recommendation, which the CMA is putting into action on an interim basis, and without compulsory information gathering powers, while the scheme awaits formal legislation.

The CMA looked at fuel prices at the pump for drivers from the end of May to the end of October.

Pump prices for both petrol and diesel have increased 11.1 pence per litre (ppl) for petrol and 13.9ppl for diesel since May.

However, during June, July and August, this appears to have been driven by global factors such as increased crude oil prices. Wholesale prices then reduced in September and October while retail prices did not.

While it is too early to draw definitive conclusions, this could indicate a lack of competitive response from fuel retailers if this trend continues, the CMA said, adding that it will monitor these developments.

For petrol, prices have increased from 142.9ppl at the end of May 2023 to 154.0ppl at the end of October. For diesel, pump prices at the end of May stood at 147.9ppl and had increased to 161.8ppl by the end of October.

The fuel margin data of supermarkets from the start of 2023 up to August shows that the margins of supermarkets reduced over the period June – August.

Margin data is not yet available for September and October and relies on voluntary information sharing by the retailers.

In the period from May to August, average fuel margins fell around 4.5ppl (from an average of 11.9ppl in May compared to 7.3ppl in August). Nonetheless, August margins remain higher than those for any year prior to 2021.

For these update reports, the CMA issued requests for information to Applegreen – Petrogas, Asda, BP, Esso, Euro Garages Ltd, Morrisons, Motor Fuel Group, Moto-Way, Rontec, Sainsburys, Shell, Tesco and Welcome Break, and received responses from all except Shell and Moto-Way.

“Drivers are feeling the pain again as petrol prices at the pump have been on the rise since June. The underlying data shows a mixed picture in terms of what is driving this. Over the summer we saw rising wholesale costs, but more recent trends give cause for concern that competition is still not working well in this market to hold down pump prices,” Sarah Cardell, chief executive of the CMA, said.

“As our year-long, in-depth study showed, this is a market where competition is not working as well as it should. But while today’s first monitoring report is an important step, it is based on voluntary information and is missing some major fuel retailers. That’s why it is so important that a permanent fuel monitor – with powers to demand information from all retailers – is put in place to give a fuller picture of how the market is working.”

Responding to the CMA’s interim monitoring update, Gordon Balmer, executive director of the Petrol Retailers’ Association, said: “We are pleased to see the depth of participation in the CMA’s interim fuel price transparency scheme. We will continue to work closely with the CMA as they develop their permanent scheme.

“With the volatility of the global fuel market, it is important that motorists are given the opportunity to search for the cheapest prices available to them. As always, I would encourage motorists to shop around to find the best deals possible.”

Separately, the temporary pricing data scheme set up by the CMA now has 12 retailers participating, representing approximately 40 per cent of UK forecourts and more than 60 per cent of fuel sold. The data is used by third parties such as petrolprices.com and the AA, providing pricing information in an open, transparent manner.

The government has committed to legislating for a mandatory, real-time pricing data scheme and will consult on it later this year.

Supermarkets remain, on average, cheaper than other types of retailer, generally maintaining an average pricing gap of around 4-6ppl between supermarkets and other retailers since 2017.