Review into how to stop rising cost of petrol and diesel launched, with report due in the autumn
A full review into how to stop the rising cost of fuel in the UK has been launched, a government watchdog’s report has said today, after it raised a “cause for concern” over the price of fuel.
It follows an urgent review undertaken by the Competition and Markets Authority (CMA), which found that there was, on average, a difference of around 10p per litre on the wholesale price of fuel being bought by retailers and what it was selling it for at the pumps.
The price rise has taken hold in recent weeks, with the cost of wholesale fuel falling by 5p but pump prices still increasing to an average of 191.43p for petrol and 199.05p for diesel.
However, the CMA said this was not the most significant contributor to the rise. Instead, it found that high pump prices were being driven by the record cost of crude oil and the growing gap between that price and the wholesale cost of petrol and diesel – the so-called ‘refining spread’. A 160-litre barrel of crude oil currently sits at around $128.85 (£107.87).
The report noted: “The retailer spread is volatile, and the CMA is aware that in recent weeks, it has grown larger. The CMA will be monitoring this closely as it takes forward the market study.”
“Significant differences” were also found between forecourt prices in urban and rural areas and the CMA said further investigation was needed.
The CMA was also asked by the UK government to advise on possible measures “to increase the transparency that consumers have over retail prices”. It has recommended an open data scheme to help consumers access and compare local pump price information – especially for motorway services.
It confirmed the review will be published in the autumn.
Sarah Cardell, CMA general counsel, said: “The recent rises in pump prices are a major worry for millions of drivers. While there is no escaping the global pressures pushing up fuel prices, the growing gap between the oil price and the wholesale price of petrol and diesel is a cause for concern.
“We now 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 added: “On the whole, the retail market does seem to be competitive, but there are some areas that warrant further investigation. These include finding out whether the disparities in price between urban and rural areas are justified.”
Jack Cousens, the AA’s head of roads policy, said: “Pump price competition in the UK is broken. A month of major wholesale price falls without a penny coming off the average pump price of petrol is testament to that.”
The RAC’s Simon Williams said: “Regardless of the reasons for wholesale prices being what they are, we continue to believe there is clear evidence, not least in the last week, that major retailers are incredibly slow to pass on falling wholesale costs, yet quick to pass on rising ones. The idea of allowing drivers to more easily compare pump prices near them may also prove beneficial.”