The UK's Competition and Markets Authority is looking into rising petrol and diesel prices amid concerns that retailers are charging more than necessary in response to the ongoing conflict in the Middle East. The watchdog is accelerating its review of fuel margins and will look into how quickly fuel prices change with wholesale costs and whether there is evidence of 'rocket and feather pricing'. Firms responsible for fuel stations across the country must soon supply revenue, costs, and sales data to the Competition and Markets Authority. Juliette Enser, executive director for markets at the Competition and Markets Authority, stated, 'Whilst price increases might be inevitable because of rising wholesale costs, it is important that those increases reflect genuine cost pressures.' She added, 'We will be closely scrutinising and reporting on what's happening with fuel prices and call out any concerning behaviour.' The specific evidence the Competition and Markets Authority has found regarding 'rocket and feather pricing' or other concerning behavior by fuel retailers remains unclear.
Chancellor Rachel Reeves accused petrol retailers of 'price gouging' and insisted the government's priority was to stop companies from using the conflict in the Middle East to 'rip off their customers'. She noted, 'Yesterday some petrol retailers were charging almost 180p a litre while others charged less than 130p a litre.' Some have accused fuel retailers of price gouging in the two weeks since strikes across the Gulf broke out. The Competition and Markets Authority warned in December that fuel margins remain persistently high compared to historic levels and this could not be explained by retailers' operating costs. How the government plans to enforce measures to prevent price gouging and when Chancellor Rachel Reeves will meet with companies to address pump prices is not yet known.
Whilst price increases might be inevitable because of rising wholesale costs, it is important that those increases reflect genuine cost pressures.
Petrol and diesel prices hit their highest in more than 20 months this week, increasing by between 6.12p and 12.74p per litre since Saturday 28 February. The latest rise in fuel prices is the steepest since Russia's invasion of Ukraine and shows little sign of abating. Drivers have started to observe the cost of petrol and diesel escalating in the wake of the Middle East conflict. The RAC reports that the average price of petrol rose by nearly 2.5p a litre, and diesel by more than 3p, between last Saturday and this Wednesday. There are accounts of prices on some forecourts increasing by much more than the average reported by the RAC.
Howard Cox, founder of FairFuelUK, claimed, 'Most of these forecourts, many believe, are selling fuel at these higher prices even though they bought these stocks before any wholesale rises.' He added, 'It seems opportunistic profiteering is rife once again.' Whether the reported price hikes by some forecourts are directly linked to wholesale cost increases or if they involve opportunistic profiteering is a key question in the investigation.
We will be closely scrutinising and reporting on what's happening with fuel prices and call out any concerning behaviour.
Gordon Balmer, executive director of the Petrol Retailers Association, explained, 'The conflict in the Middle East has increased the wholesale cost of petrol and diesel, which will mean pump prices will have to go up.' He noted, 'Rising fuel prices hurt the economy in the form of higher inflation, impacting already hard-pressed household budgets.' The exact impact of the Middle East conflict on wholesale fuel costs and how long the price increases are expected to last has not been determined. Oil prices escalated further on Thursday, with Brent crude trading at over $83 a barrel. The sharp rise in oil prices, coupled with a significant surge in wholesale gas costs, has sparked concerns that household energy bills could skyrocket later this year.
The Petrol Retailers Association has penned a letter to Chancellor Rachel Reeves urging her to abandon a planned fuel duty increase later this year. Whether this letter will lead to the abandonment of the planned fuel duty increase later this year is uncertain. The watchdog's investigation comes as the industry faces scrutiny over pricing practices during a period of global instability.