Drivers faced ‘most volatile’ year with petrol and diesel prices
Woolwich resident says petrol prices are 'astronomical'
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A new report published today from the Competition and Markets Authority (CMA) found that the constant petrol and diesel price changes require further investigation. The study follows on from an urgent review that had been commissioned by the Government to look, in particular, at whether the cut in fuel duty, announced in March 2022, had been passed on to consumers.
The CMA analysis found that 2022 was the most volatile for fuel prices since records began, rising by around 50p a litre from January to July.
This was the largest leap in fuel prices ever recorded in one year, before falling by 31p for petrol and 14p for diesel since.
The gap between diesel and petrol prices has become larger than ever reliably recorded, as diesel now costs 24p more per litre than petrol.
The CMA claimed this was largely due to Western Europe’s reliance on imports of diesel, but not petrol, from Russia.
Prices also vary widely between local areas, with some saying it is creating a “postcode lottery” to find affordable fuel.
The Government department found that prices are likely to be higher at petrol stations where there are few (or no) competitors nearby – and particularly where there is no local supermarket petrol station.
The report stated: “Based on current petrol and diesel prices the margin increases we have seen over this period would equate to approximately 2-3ppl on diesel and 3-4ppl on petrol.
“We also see evidence of changes in pricing behaviour, with some generalised ‘rocket and feather pricing’ emerging in 2022.”
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Unlike the urgent review in July, a Market Study allows the CMA to use compulsory information-gathering powers to probe the entire market.
The CMA has also conducted in-depth analysis of fuel prices over the last five years, rather than just the one year covered by the urgent review.
Sarah Cardell, Interim Chief Executive of the CMA, said: “It has been a terrible year for drivers, with filling up a vehicle now a moment of dread for many.
“The disruption of imports from Russia means that diesel drivers, in particular, are paying a substantial premium because of the invasion of Ukraine. A weaker pound is contributing to higher prices across the board too.
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“There are no easy answers to this. The question for the CMA is whether a lack of effective competition within the UK is making things worse.
“Although it is only a small proportion of the overall price, the increase in margins for many fuel retailers over the last few years is something we need to investigate further.”
Luke Bosdet, fuel spokesperson at the AA, said the CMA had echoed the calls of the AA in regard to concerns with retailer margins and geographical price variations.
He added: “The AA very much welcomes the CMA’s work in drilling down to the root causes of the financial pain suffered by drivers and businesses in a cost of living crisis. The huge surges in pump prices have been one of the biggest contributors to inflation that has hammered UK consumers.
“One of the chief concerns has been how quickly the fuel retailers have responded to wholesale price volatility, both up and down. The drivers’ view is that pump prices shoot up much more quickly than they come down, in response to wholesale cost changes.
“The focus on the pump-price postcode lottery is also very welcome, given the big price differences between communities that are literally down the road from each other.”
There have been frequent and consistent calls for a fuel price checker, similar to the Consumer Council’s Fuel Price Checker tool in Northern Ireland.
It is said this would create greater fuel transparency, with the AA calling on the Government to speed up the processing of launching such a tool for consumers in England, Scotland and Wales.
Simon Williams, RAC fuel spokesperson, added: “We strongly urge the biggest retailers to lower their prices. Unfortunately, we fear they are holding out, hoping for a rise in the price of oil later this month.”
The CMA is now inviting views and comments on the emerging evidence published today. A further update, including options for possible next steps, will be published in the Spring.
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