The urgent review, requested by Business Secretary Kwasi Kwarteng last month and sent to the UK government on the 7th of July, has today been published in full.
The report finds that:
In light of some of the concerns found and the urgency of the situation, the Competition and Markets Authority (CMA) has today launched a market study that will examine the road fuel market in more depth, making full use of its compulsory information gathering powers. An interim update will be published in the autumn.
The CMA was also asked by the UK government to advise on possible measures “to increase the transparency that consumers have over retail prices”. The review sets out how an open data scheme could help consumers more easily access and compare local pump price information, and create new commercial opportunities for tech developers. There may also be merit in providing more information about pump prices on motorways.
Sarah Cardell, CMA General Counsel, said:
The recent rises in pump prices are a major worry for millions of drivers. While there is no escaping the global pressures pushing up fuel prices, the growing gap between the oil price, and the wholesale price of petrol and diesel, is a cause for concern. We now need to get to the bottom of whether there are legitimate reasons for this and, if not, what action can be taken to address it.
On the whole the retail market does seem to be competitive, but there are some areas that warrant further investigation. These include finding out whether the disparities in price between urban and rural areas are justified.
This area of work is a major priority for the CMA and if we can help, we will. That’s why we are immediately launching a market study that will use our formal legal powers to investigate this in more depth. If evidence emerges of collusion or similar wrongdoing, we won’t hesitate to take action.
The principal drivers of rising pump prices over the last 12 months have been:
Although there are concerns from some about fuel retailers profiting from the current situation, our review finds that over the course of a year, the gap between wholesale prices and retail prices (the ‘retailer spread’) has not been a significant contributor to the overall rise in pump prices.
The retailer spread is volatile, and the CMA is aware that in recent weeks it has grown larger. The CMA will be monitoring this closely as it takes forward the market study.
Further analysis of the relationship between wholesale and retail prices – including how rises and falls in wholesale prices are reflected at the pump – will be carried out as part of the CMA’s market study.
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