Watchdog finds no proof of widespread fuel price gouging

Watchdog finds no: The UK’s competition watchdog has found no evidence of widespread fuel price gouging by retailers in the weeks following the outbreak of the US-Israel war with Iran. The Competition and Markets Authority (CMA) reported that profit margins on petrol and diesel were “broadly unchanged” between February and March, indicating that retailers did not significantly increase their margins during this period.

Fuel profit margins remain stable despite global tensions

Following the escalation of conflict in the Middle East, wholesale fuel prices spiked sharply, prompting the CMA to intensify its monitoring of petrol and diesel prices. Despite these pressures, the watchdog’s analysis showed that retail fuel margins—the difference between the wholesale cost and the price paid by consumers—remained close to the average margin of 10.7 pence per litre recorded last year.

Prime Minister Sir Keir Starmer had previously warned that the government was ready to intervene if fuel companies attempted to exploit the situation by overcharging customers. However, forecourt retailers denied any price gouging and criticized the government’s language as “inflammatory.”

Specific retailer margins and ongoing investigations

While overall margins were stable, the CMA identified that margins increased between February and March for two supermarket chains and three non-supermarket retailers. The watchdog is investigating these cases and plans to report further findings in May.

Additionally, the CMA is examining a period of higher fuel margins—12.7 pence per litre—observed in December and January before the conflict began. The regulator noted that these elevated margins are part of a broader context of historically high fuel retail margins, which reflect ongoing concerns about limited competition in the UK fuel market.

Factors influencing fuel prices and consumer impact

The CMA attributed the rapid rise in pump prices primarily to wider cost pressures, especially the increase in global oil prices. Approximately 20% of the world’s oil and liquefied natural gas typically passes through the Strait of Hormuz, which has been effectively closed for two months due to the conflict, causing global energy prices to soar.

In mid-April, petrol prices peaked at 158.3 pence per litre and diesel at 191.5 pence per litre, according to RAC data. Although prices have since fallen slightly, petrol remains 24.2 pence per litre and diesel 46.0 pence per litre more expensive than before the conflict began.

Simon Williams, head of policy at the RAC, noted that pump prices have not decreased as quickly as wholesale prices would suggest. However, recent increases in wholesale petrol prices may halt further reductions at the pump. CMA chief executive Sarah Cardell emphasized that the watchdog will remain vigilant to ensure any decreases in wholesale costs are passed on to consumers.

Local price variations and government response

The CMA highlighted significant local variations in fuel prices, with potential savings of up to £9 per tank for drivers who shop around. Minister for Energy Consumers Martin McCluskey acknowledged that most retailers have acted responsibly by avoiding margin increases, but noted that some have not. The government supports the CMA’s efforts to investigate and hold those retailers accountable.

Concerns about pricing practices and heating oil

In March, the CMA announced it would examine how quickly fuel prices rise and fall relative to wholesale costs, investigating the possibility of “rocket and feather” pricing—where prices increase rapidly but fall slowly. This practice was previously observed following Russia’s invasion of Ukraine in 2022.

The AA reported that wholesale diesel prices have fallen more than pump prices, and that petrol prices on motorways can be up to 20 pence per litre higher than on A-roads. The AA’s spokesman on pump prices, Luke Bosdet, stated that while there may not be widespread price gouging, issues like “rocket and feather” pricing and regional price disparities remain significant concerns.

Furthermore, the CMA is investigating heating oil prices after receiving reports from consumers about troubling experiences with retailers, indicating ongoing scrutiny of fuel-related markets beyond petrol and diesel.

Original report