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The UK competition watchdog will deepen its scrutiny of fuel retailers and accuse them of “rocket and feather” tactics after drivers faced record pump prices this year.
The Competition and Markets Authority said it had seen “some evidence of rocket and feather behaviour” – when prices rise quickly but come down slowly – this year which was not evident in previous years, particularly on diesel.
The CMA’s intervention came after the then Business Secretary, Kwasi Kwarteng, asked the watchdog to urgently review petrol station operators, amid concerns that retailers had not cut fuel duty.
In July, the CMA’s initial review found that “fuel duty cuts appear to have been implemented, with the largest fuel retailers doing so immediately and others gradually”.
However, retailers were often accused of profiteering by not passing on the drop in oil prices to consumers at the pump.
Petrol and diesel prices hit series records over the summer after oil prices surged following Russia’s invasion of Ukraine.
Prices rose by almost 50p a liter from January to July, the biggest jump in fuel prices recorded in a year, and have since fallen by 31p for petrol and 14p for diesel. The gap between diesel and petrol prices is the highest recorded.
The CMA on Tuesday described 2022 as “the most volatile year for fuel prices since reliable records began”.
The watchdog plans to investigate further whether the increase in fuel retailers’ margins in recent years is due to competition issues. Between 2017 and 2021, margins on diesel have increased by around 2-3p per liter and on petrol by 3-4p.
The CMA said it had found evidence that prices are likely to be higher at petrol stations where there are few or no competitors nearby – and particularly in areas where there are no local supermarket petrol stations.
The CMA’s interim chief executive, Sarah Cardell, said: “It’s been a terrible year for drivers, with filling up now a moment of dread for many.
“The disruption to imports from Russia means diesel drivers, in particular, are paying a significant premium due to the Ukraine invasion. The weak pound also contributes to higher prices across the board.”
RAC fuel spokesman, Simon Williams, said: “While it is encouraging that the CMA has seen evidence of prices ‘rocketing and feathering’ this year, we believe there was clear evidence of that happening last year and this time in 2018 and 2019.
“Fuel price volatility has undoubtedly been a problem since Russia invaded Ukraine but when wholesale prices drop for weeks at a time drivers should see pump prices doing the same at the same rate – unfortunately our data shows this is often not the case. “
AA fuel pricing spokesman Luke Bosdet said: “One feature that has become very apparent since the summer is the ‘maverick’ independent fuel retailers, who have often cut their pump prices below those provided by nearby supermarkets and major oil companies. sites
“How they, without the economies of scale of the big retailers, are able to charge very low prices but say they can operate at such low levels is something the CMA has to consider.”
In July the CMA said it found “cause for concern in the widening gap between wholesale prices when crude oil enters refineries and when it leaves refineries as petrol or diesel”.
However on Tuesday it said it saw no cause for concern over competition levels despite rising refining margins and that “in the medium term, UK refiners have not made profits at a level that would give us cause for concern”.
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