Issued by: Competition and Markets Authority

Today’s interim monitoring report sets out the CMA's observations on developments in the road fuel retail market since the previous update in July 2024.

• Fuel margins remain higher than historic levels

• CMA remains concerned about weakened competition in fuel retail sector

• Drivers set to benefit from scheme tracking real time fuel prices next year

Dan Turnbull, Senior Director of Markets at the CMA, said:

"While fuel prices have fallen since July, drivers are paying more for fuel than they should be as they continue to be squeezed by stubbornly high fuel margins. We therefore remain concerned about weak competition in the sector and the impact on pump prices.

"With that in mind, we are pleased the government is progressing with our recommendations. These measures will empower drivers to find the cheapest fuel prices wherever they are in the UK, increase competition and support the economy – the more people save on fuel, the more they have to spend in other areas."

Fuel margins

Fuel margins of retailers – the difference between what a retailer pays for its fuel and what it sells at – remain around the high levels seen during the CMA’s road fuel market study (https://www.gov.uk/cma-cases/road-fuel-market-study).

Supermarket fuel margins increased over the May to August 2024 period, up from 7.0% in April to 8.1% in August. Non-supermarket fuel margins also increased from 7.8% in April to 10.2% in August.

The sustained increase in the level of fuel margins is concerning and suggests that overall levels of competition in the road fuel retail market remain weakened.

Fuel prices

Fuel prices decreased for both petrol and diesel from June to October 2024. These movements reflect in part changing crude oil prices and refining spreads, both of which are driven by global factors.

The average petrol and diesel prices at the end of October were 134.4 and 139.7 pence per litre (ppl) respectively. This represents a decrease of 10.0 ppl and 10.4 ppl in petrol and diesel prices than the previous four months.

Retail spreads

The CMA also looked at the retail spread – the average price that drivers pay at the pump compared to the benchmarked price that retailers buy fuel at – over July to October 2024.

Retail spreads were above the long-term average of 5-10 ppl, with petrol averaging 14.9 ppl and diesel averaging around 16.3 ppl. Retail spreads have been above long-term averages since 2020, indicating an ongoing lack of retail competition in the sector.

While spread analysis can give a quick overview of trends in the sector, it is a less reliable indicator of competitive intensity than individual retailers’ fuel margins. Retail spreads increase and decrease in response to the volatility of wholesale prices but should return to a normal range over time.

Road fuel market study

At the end of its road fuel market study, the CMA recommended a new monitoring function and fuel finder scheme (https://www.gov.uk/government/news/cma-sets-out-plan-to-help-drivers-get-more-competitive-fuel-prices). The previous government accepted those recommendations and determined the CMA would take on the new statutory monitoring function. The new government has since confirmed its commitment to implementing both measures.

The fuel monitoring function will provide ongoing scrutiny of prices to encourage effective competition between retailers and help keep prices low for drivers. This interim update is based on data provided voluntarily by fuel retailers until new powers come into effect at the beginning of next year.

The ‘Fuel Finder’ scheme will allow drivers to compare real-time fuel prices, via navigation apps, in-car devices and comparison websites. The government’s aim is to launch the scheme by the end of next year, subject to securing the necessary legislative powers.

Notes to editors

1. Fuel retailers will be legally required to provide information when requested under new powers set out in the Digital Markets, Competition and Consumers Act 2024. Until these powers come into force, the CMA has used information requested on a voluntary basis from major fuel retailers, including: Applegreen-Petrogas, Asda, BP, Esso, Euro Garages, Morrisons, Moto Hospitality, Motor Fuel Group, Rontec, Sainsbury’s, Shell, Tesco, and Welcome Break.

2. All enquiries from journalists should be directed to the CMA press office by email on press@cma.gov.uk or by phone on 020 3738 6460.

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