Drivers could be paying more than they should for petrol and diesel after the UK’s competition watchdog said fuel profit margins remain at “persistently high levels” despite prices at the pump having fallen.
The Competition and Markets Authority (CMA) also questioned retailers’ claims that this was due to higher operating costs.
In its first annual road fuel monitoring report, the CMA said competition in the sector was “weak”.
The report was published as the government prepares to launch its “fuel finder” scheme, which will allow drivers to compare fuel prices in real time.
Petrol cost 136.8 pence per liter last week, according to government tracking, while diesel cost 146.1 pence per litre.
The CMA report found fuel prices had fallen “significantly” since it last studied the issue in 2023, largely due to lower oil prices.
However, he said fuel profit margins for both supermarket and non-supermarket retailers were “historically high”.
“Average fuel margins in percentage terms have continued to increase for both supermarket retailers and non-supermarket retailers,” he said.
The report noted arguments from fuel retailers that their operating costs had increased, but if this were the case, “we would expect to see this reflected in a decline in profit margins.”
The CMA said that if there was more competition, drivers would see better fuel prices at the pump.
Retailers must register with the planned fuel lookup scheme and report price changes within 30 minutes of implementation.
The CMA said the finder could be accessed through apps and satnavs, and would allow drivers to easily compare prices.
“In turn, this should incentivize retailers to compete harder for customers, putting downward pressure on prices.”
Dan Turnbull, senior director of markets at CMA, said: “Fuel margins remain at persistently high levels, and our new analysis shows that operating costs do not explain this.
“We know fuel costs are a big issue for drivers, especially at this time of year when millions of people are traveling across the country.”
Both the RAC and the AA said drivers were being overcharged for fuel.
The AA said that since November the wholesale cost of petrol has fallen by more than 7p per litre, but the average price of petrol at the pump had fallen by just two-thirds of a cent.
“It comes as millions of drivers hit the road at Christmas and are being overcharged for fuel,” the motoring authority said.
“Drivers are being misled at the pump, as the CMA clearly illustrates.”
RAC head of policy Simon Williams said: “Many drivers will not be surprised to learn that they are still paying too much for fuel, especially judging by the complaints we receive about large variations in prices from area to area.”
He said retailers’ arguments about higher operating costs “have now been clearly rejected” by the CMA.
“We sincerely hope that the new fuel search scheme, combined with the CMA’s continued scrutiny, will ultimately lead to greater competition and lower prices at forecourts for drivers across the country.”
