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Britain’s competition regulator has launched an in-depth investigation to investigate concerns about fuel price spikes.
The Competition and Markets Authority will look at the differences between rural and urban petrol and diesel prices, as well as the widening gap between the price of crude oil as it enters refineries and the wholesale price as it leaves.
In an emergency review published on Friday, the CMA found that while there were concerns that some retailers were profiting from the current situation, it was not a major contributor to the spike in pump prices.
About 40% of the current rise in fuel prices was due to increases in how much refiners charge retailers for wholesale diesel and gas.
The difference between the price of crude oil and wholesale prices has tripled in the past year from nearly 10p to almost 35p, the CMA said.
Over the same period, the disparity between wholesale prices and what consumers pay varied but remained at an average of 10p per litre.
In most cases, the CMA said the 5p cut in fuel duty was passed on to motorists, although some retailers took longer to do so than others.
Petrol station prices have risen to record highs since the start of the war in Ukraine, with the cost of filling up an average family car now in excess of £100. Britons now pay around £1.91 a liter for petrol and £1.99 for diesel.
Sarah Cardell, Chief Adviser to the CMA, said: “While there is no escaping the global pressures driving up fuel prices, the widening gap between the price of oil and the wholesale price of petrol and diesel is a cause for concern.
“Now we need to get to the bottom of whether there are legitimate reasons for this and, if not, what action can be taken to address it.”
She said the retail market “appears to be competitive” overall, but there are some areas that “deserve further study.”
“These include establishing whether price differences between urban and rural areas are justified,” she said.
She said the CMA would use its formal statutory powers to investigate this more thoroughly, adding: “If evidence of collusion or similar misconduct emerges, we will not hesitate to take action.”
The AA welcomed the inquiry but said the problem was not the difference between the price of oil and the wholesale price fed to forecourts, but the length of time it took for that wholesale price to be reflected at the pump.
“The fuel trade has no problem passing on rising costs to customers, but is lagging far behind in passing on the savings,” said Jack Cousens, the AA’s head of road policy.
“It was labeled as ‘rocket and feather’ pricing and it exists.”
He said that before the pandemic, it would have taken just days for wholesale price cuts to be passed on to consumers, first from cost-cutting supermarkets and then from other retailers looking to stay competitive.
“That trigger seems to have disappeared and now there is a need to find another way to reinvigorate price competition at the pump,” he said, praising the CMA for looking at ways to increase price transparency.
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