Petrol Stations Accused Of Profiteering As Watchdog Exposes Surge In Fuel Margins

Petrol stations across the UK are under fire after the competition watchdog revealed a significant rise in profit margins at the pump. Motorists have been left paying much higher markups than in previous years, with profit margins more than doubling at leading supermarkets and climbing sharply at other forecourts.

The Competition and Markets Authority (CMA) reports that the percentage of each pound spent on fuel that goes directly to retailers has reached levels well above historical norms. Industry figures show supermarket fuel margins averaged between 8 and 9.1 percent in the second quarter of this year, compared with just 4 percent in 2017. Other forecourts are now pocketing profits of as much as 10.6 percent per pound—a sizeable leap from 6.4 percent eight years ago. This change sees drivers handing over up to 10p for every pound spent straight into retailers’ profits, up from just 4p previously.

The average cost of a litre of petrol climbed by 1.9p last month, reaching 133.9p, while diesel rose by 3p to 141.9p. Although a rise in oil prices has contributed to increased costs, the enduringly high fuel margins are a particular concern highlighted by the CMA. Drivers are being urged to shop around, which should become easier as the Government prepares to launch the Fuel Finder scheme later this year. The initiative will make real-time pricing data accessible through navigation apps, in-car GPS, and comparison websites, helping consumers find competitive prices more easily.

According to the AA, many consumers are struggling with a ‘postcode lottery’ of pump prices, with neighbouring towns often charging vastly different rates due to localised price-matching. More rip-off locations exist now than truly competitive ones, say consumer groups. Despite ongoing scrutiny from the CMA, retailers show little sign of lowering margins.

The Petrol Retailers Association counters that increased operational costs are partly responsible for the higher margins. Rising borrowing costs, the national minimum wage hikes, increased business rates, higher employer National Insurance contributions, energy bills, and security concerns have all placed additional pressures on the industry, according to sector representatives.

Petrol prices remain below the peaks witnessed in the summer of 2022, when geopolitical tensions sent prices soaring to record levels. However, accusations of profiteering have dogged retailers, especially supermarkets, with MPs questioning major grocers over their reluctance to pass on savings to drivers. The CMA’s analysis suggests market competition has weakened, with former price leaders opting for significantly higher margin targets following recent corporate takeovers.

Ultimately, regulatory scrutiny and new transparency measures may bring respite to UK drivers weary of unpredictable and often excessive prices at the pump. For now, consumers are advised to make use of available comparison tools and follow developments as the Fuel Finder scheme rolls out.