The UK government has ordered an “urgent” investigation into fuel station operators amid concerns some are pocketing the multi-billion-pound cut to fuel duty, which was originally intended to alleviate the pressure on households.
In a letter to the Competition and Markets Authority (CMA), Business Secretary Kwasi Kwarteng expressed concerns that the 5 pence-a-litre reduction had not stopped prices from soaring.
“Drivers should be getting a fair deal for fuel across the UK,” he said. “The British people are rightly frustrated that the £5 billion [$6 billion] package does not always appear to have been passed through to forecourt prices.”
He asked the CMA to conduct an “urgent” review of the fuel market to explore “whether the retail fuel market has adversely affected consumer interests.”
The CMA subsequently announced it will carry out a “short and focused review” of fuel prices.
CMA Chief Executive Andrea Coscelli said record pump prices are “causing significant concern” for millions of consumers and businesses.
“Global factors, including the war in Ukraine, have been the principal driver of recent trends. But if competition is not working well in the retail fuel market, pump prices will be even higher than they need to be,” he wrote in a response to Kwarteng.
Figures from data firm Experian show the average price of a litre of petrol at UK forecourts climbed to a record 185.0 pence ($2.25) on Sunday, representing an increase of 7.1 pence in just a week.
The average price of diesel was 190.9 pence per litre on Sunday.
Motoring group RAC welcomed CMA’s action but said the government needs to do more to help drivers.
RAC fuel spokesman Simon Williams said: “Since Russia invaded Ukraine on Feb. 24, the wholesale price of petrol has gone up by 28 percent.
“This is why the government’s 5p March duty cut has had little effect, whether or not it’s been fully passed on by retailers, and why they need to go further now to help drivers.”
But Prime Minister Boris Johnson’s official spokesman said there are “no plans” for a further duty cut.
AA, another motoring group, said the rise in fuel prices “should be grinding to a halt” by the end of the week owing to wholesale prices falling since the start of the month.
“If they continue to go up substantially afterwards, we will be intrigued to hear what excuses the fuel trade has this time,” said AA fuel price spokesman Luke Bosdet.
Bosdet added that the “relentless surge” in wholesale and retail costs for diesel is “a nightmare” which will have a knock-on effect on delivery prices for goods and services.
