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Report on Fuel Prices Broadly Welcomed but Falls Short on Action: MP
Publication of a report by the Competition and Markets Authority (CMA) into road fuel prices has been broadly welcomed by Gordon MP Richard Thomson but ‘falls short’ on action to truly benefit local motorists.
The CMA report has concluded that competition in this market is not working well, with a weakening of competition in retail since 2019.
In particular, the report’s findings show that:
· From 2019-22, average annual supermarket margins have increased by 6 pence per litre (PPL).
· Increased margins on diesel across all retailers have cost drivers an extra 13 PPL from January 2023 to the end of May 2023.
· Motorway service stations are charging around 20 PPL more for petrol and 15 PPL more for diesel compared to other fuel stations.
The report also found that in 2022 Asda and Morrisons each, separately, made a decision to target higher margins. Other retailers, including Sainsbury’s and Tesco, did not respond in the way you would expect in a competitive market and instead raised their fuel prices in line with these changes. Taken together this indicates that competition has weakened and reinforces the need for action.
It was also found that diesel prices have been slow to drop in 2023, partially down to Asda ‘feathering its prices’ (reducing pump prices more slowly as wholesale prices fell) and other firms not responding competitively to this. As a result, the CMA estimates drivers paid 13 PPL more for diesel from January 2023 to the end of May 2023 than if margins had been at their historic average.
Commenting, Richard Thomson MP said:
“This report has been a very useful piece of work and I broadly welcome its findings.
“Unfortunately, the recommendations fall short of any intervention which would truly benefit local motorists, living as we do in the North-east where a car is still essential due to the rural nature of some of our communities.
“The UK Government’s response to the cost-of-living crisis to date has been fairly inept and it must be prepared to act where there is evidence of ‘feathering’ or uncompetitive practices as highlighted in the report.
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Note: Photograph attached shows Richard Thomson MP.
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