Gas stations are under investigation for failing to pass on falling wholesale prices to drivers and there are suspicions that fuel traders are using the war in Ukraine as a cover to boost profits.
The Competition and Markets Authority said it has seen “rocket and feather” prices for fuel, where prices rocket up sharply to accommodate higher oil prices and other costs, but then slowly fall like a feather when market prices fall. With this arrangement, retailers keep the difference between wholesale prices and pump prices when costs go down.
“Between 2017 and 2021, the difference between the price retailers paid for fuel and the price at the pump (the ‘fuel spread’) increased by the equivalent of 2-3p per liter of diesel and 3-4p per liter of petrol,” it said CMA found.
The watchdog said the surge could be due to “extreme volatility in prices and supply in 2022” but promised to “investigate further”.
Brent crude hit highs of more than $125 a barrel in March after Russian President Vladimir Putin’s war and reached similar prices in June. Since then, prices have fallen and the oil’s most recent value was closer to $80.
Petrol prices hit record highs of almost 200p a liter in the summer but have since fallen again, most recently falling below 160p a liter.
Diesel drivers have suffered more sustained increases, the CMA said. The gap between the two fuels is the widest on record, with a 24p premium for diesel.
Much of this is due to Western Europe’s reliance on diesel imports from Russia, disrupted by Moscow’s attack on Ukraine.
RAC fuel spokesman Simon Williams said: “While it is encouraging that the CMA has found evidence of Rocket and Feather awards being held this year, we believe it was around this time last year as well as in the years 2018 and 2019 there was clear evidence of this.
“Volatility has undoubtedly been an issue with fuel prices since Russia invaded Ukraine, but if wholesale prices have been trending down for weeks, drivers should see pump prices do the same at a similar rate.
“Unfortunately, our data shows that this is not often the case.”
The CMA also found evidence that areas with fewer gas stations and therefore less competition had higher fuel prices, particularly in areas without supermarket pumps.
Supermarkets often sell fuel at lower margins than dedicated gas station networks in order to lure buyers into their stores.
Sarah Cardell, interim CMA CEO Sarah Cardell said: “It has been a terrible year for drivers and refueling a vehicle is now a moment of dread for many.
“The disruption to imports from Russia means that diesel drivers in particular are paying a significant premium because of the invasion of Ukraine. A weaker pound also contributes to higher prices in general.”
Higher energy costs have also contributed to rising gasoline and diesel prices at the pump as oil refining and distribution costs rise.
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