Rising oil refiner margins blamed for soaring fuel costs, Competition Authority finds
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Soaring fuel costs have been driven by the rising price oil refiners are charging to process crude oil, a review by the Competition and Markets Authority (CMA) has found.
The review, which was requested by business secretary Kwasi Kwarteng last month, found that while crude oil prices have been rising over the last year, there has been a “growing gap” between that price and the wholesale price of petrol and diesel.
The ‘refining spread’, or the margin charged by refineries on each litre of fuel, was found to have tripled in the last year, from 10p to nearly 35p per litre.
Over the same period, the so-called ‘retailer spread’, or the difference between the wholesale price and the price charged to motorists, fluctuated but remained about 10p per litre on average.
On the whole, the 5p fuel duty cut appears to have been implemented, with the largest fuel retailers doing so immediately and others more gradually.
Significant differences in fuel prices were also found between many rural and urban areas.
The CMA launched a market study today that will examine the road fuel market in more depth through the use of its compulsory information-gathering powers.
The CMA was also asked by the 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.
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.”
The number of UK households struggling to pay their fuel bills was expected to treble in April following the new energy price cap.
Ofgem anticipates it will rise yet again in October, from £1,971 to roughly £2,800 a year as the UK faces “once-in-a-generation event”.
Figures from data firm Experian show the average price of a litre of petrol at UK forecourts on Wednesday was 191.3p, with diesel at 198.8p per litre.
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