Gas station accused of pocketing fuel tax cuts – BBC News

  • By Michael Race
  • Business journalist, BBC News

image source, Getty’s image

Gas stations and retailers have “pocketed” the profits from the 5p fuel price cut, claims the Chair of the Financial Selection Committee.

Conservative MP Harriett Baldwin accused the retailer of not passing on tax deductions to drivers.

Fuel duties were cut last March, but there are fears they may not be reflected immediately through lower pump prices.

An investigation found the cuts had continued, but said increased profit margins nullified profits.

On Monday, the Competition and Markets Authority said supermarkets, usually known for having cheaper fuel prices, had been trying to increase profits from selling the fuel, increasing their margins by an average of 6p per liter between 2019 and 2022.

Its investigation also found margins on diesel at all fuel retailers had cost drivers a surcharge of 13p per liter during the first five months of this year.

Ms Baldwin claims that because of seller’s higher profit margins, the petrol and diesel tax cuts have gone “straight to the bottom line” of businesses.

“The thing that bothers me from the Treasury’s point of view is that the chancellor is cutting the fuel duty by 5p to help families with their living expenses, but it doesn’t appear to be inherited,” he told the BBC’s Today programme.

Gasoline and diesel prices soared to record highs after Russia’s invasion of Ukraine, but have since fallen back.

CMA began the investigation after concerns were raised that fuel prices were not falling as quickly as they should have been in response to lower wholesale costs facing retailers.

The watchdog found supermarkets were still usually the cheapest place to buy fuel, but warned competition between “wasn’t working the way it should”.

It noted Asda, historically the cheapest for fuel, and Morrison “made the decision to increase their target margins” on petrol and diesel starting in 2021, with the biggest increases coming in 2022-23.

It said other retailers, including Sainsbury’s and Tesco, were “maintaining largely passive pricing policies”, rather than responding to competition with Asda and Morrisons to secure more customers, and “following the same price and margin trends”.

The extra costs for drivers paying at the supermarket pump as a result of higher margins were estimated at around £900 million last year, said the CMA.

It now plans to force supermarkets and other fuel retailers to publish direct prices under a new scheme aimed at creating more competition between retailers and reducing instances of overfilling.

Morrisons chief executive David Potts told the Business and Commerce committee that the supermarket had given customers a 5p discount “the same day” it was announced.

He said energy, transport and labor costs “all add up to the oil barrel”, but added “we can always do more”.

“Currently the prices on the forecourt of our supermarkets are lower than independent supermarkets and continue to be so,” he said.

The BBC has contacted the Association of Gasoline Retailers, which represents independent front pages, for comment.

All supermarkets have endorsed the idea of ​​a price transparency scheme, similar to that in Northern Ireland, where fuel is cheaper.

How to save money on gas and diesel

  • Watch your speed: RAC says 45-50mph is the most efficient speed to drive for fuel efficiency
  • Turn off the air conditioner: It takes extra energy to start a car’s A/C system and turning it on can increase fuel consumption by up to 10%, according to AA
  • Check your tire pressure: Underinflated tires will consume more gas. Check your pressure regularly, especially before long journeys

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