The UK’s Competition and Markets Authority (CMA) has confirmed it will investigate whether petrol stations are passing on the recent fuel duty cut to consumers. Following a letter from business secretary Kwasi Kwarteng, the CMA has told the Department for Business, Energy & Industrial Strategy that it will carry out a review.
The news comes amid rapidly rising fuel costs, with RAC Fuel Watch data showing average UK petrol prices passed 185p per litre on Sunday (June 12), while average diesel prices hit almost 193p per litre. That means filling a 55-litre fuel tank with petrol now costs an average of more than £101, while filling a similarly sized tank with diesel would now cost more than £105 on average.
Such rises have occurred despite Chancellor Rishi Sunak’s decision to cut fuel duty by 5p per litre earlier this year. With prices on the up following the coronavirus pandemic and the outbreak of war in Ukraine, Sunak cut fuel duty from 57.95p to 52.95p per litre for both petrol and diesel. But Kwarteng is apparently concerned that this reduction has not been passed on to motorists, and the CMA has vowed to look into the matter.
In a letter to Mr Kwarteng, the CMA’s chief executive, Andrea Coscelli, said the CMA would 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”.
“High road fuel prices are causing significant concern for the millions of consumers and businesses who rely on being able to afford to fill up their vehicles,” he told Mr Kwarteng. “As you note, global factors, including the war in Ukraine, have been the principal driver of recent trends. But if competition is not working well in the retail fuel market, pump prices will be even higher than they need to be.”
The RAC’s fuel spokesperson, Simon Williams, said the review would help to make sure drivers were paying the lowest prices possible, but warned that the government may need to go further to assist motorists.
“It’s good news that the CMA is to investigate retail fuel pricing as this should help ensure that drivers pay a fairer price at the pumps in the future,” he said. “While this is clearly a positive step, it’s also important to realise that motorists tend to lose out most when there are significant drops in the wholesale price which retailers don’t pass on.
“In a rising market, such as we’re experiencing now, it’s very different. Retailers are constantly having to put up their prices to reflect the fact their costs are increasing every time they buy new stock. Since Russia invaded Ukraine on February 24, the wholesale price of petrol has gone up by 28 percent. This is why the government’s 5p March duty cut has had little effect, whether or not it’s been fully passed on by retailers, and why they need to go further now to help drivers.”
However, Gordon Balmer, the executive director of the Petrol Retailers Association, said petrol stations were being “scapegoated” for problems beyond their control.
“The briefings provided by government spokespeople to the media indicate that Ministers do not understand how fuel prices are set,” he said. “We have contacted the Secretary of State for BEIS on multiple occasions offering to meet and explain fuel pricing. However, we are yet to receive a response.
“By law the 5ppl fuel duty cut has to be passed on – and it has been. Petrol retailers have been unfairly scapegoated for rises in the wholesale price of fuel over which they have no control. We welcome the Competition and Markets Authority investigation, as it will confirm not only that the 5ppl fuel duty cut has been passed on but that competition between forecourts remains vigorous and that our members are operating on razor thin margins.
“If the government wants to ease the burden of pump prices on motorists, they should cut fuel duty by a much more substantial margin, just as many other governments of European countries have done.”