Weak competition adds 6p to supermarket fuel prices – BBC News

  • By Daniel Thomas
  • Business journalist, BBC News

image source, Getty’s image

Drivers paid an extra 6p per liter for fuel at supermarkets last year as weak competition allowed shops to boost profit margins, a supervisor said.

The Competition and Markets Authority (CMA) said this meant drivers using supermarkets faced an additional cost of “around £900 million”.

Ministers support CMA’s call for a fuel finder scheme to help drivers find better direct prices online.

CMA boss Sarah Cardell said “something needed to change fast”.

He told the BBC: “We’ve seen retail margins improve over the last few years. And that means that riders are paying more at gas stations than if the competition was doing really well.”

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

CMA has been investigating the UK fuel market amid concerns that wholesale price cuts are not being passed on to consumers.

According to the watchdog, supermarkets are usually the cheapest place for fuel but competition is “not doing as it should”.

  • average annual supermarket margin on fuel has increased by 6p per liter between 2019 and 2022
  • The fuel margins that Morrisons and Asda are targeting for 2023 have doubled and tripled respectively since 2019
  • Sainsbury’s and Tesco followed suit and increased their prices, indicating competition had “weakened”
  • increased margins on diesel at all retailers have a surcharge driver of 13p per liter from January 2023 to the end of May 2023

RAC spokesman Simon Williams said the extra costs to consumers were “absolutely staggering in a cost of living crisis and confirms what we’ve been saying for years that supermarkets don’t treat drivers fairly at the pump”.

Asda – which was separately fined £60,000 by the CMA for failing to provide timely information to an investigation – says it is still the cheapest traditional supermarket for fuel.

Morrisons said their prices were “very competitive” and while margins were improving they “remain very low”.

‘Scam retailer’

The government supports CMA’s call for a “fuel finder” scheme that would allow drivers to access station-by-station fuel prices right on their cell phone or satnav.

Currently, retailers only provide price information at gas stations themselves, making it difficult to compare rates.

The government says the law will be changed to force fuel retailers to share information. A new “fuel monitoring” regulatory body will also be set up to check prices.

Grant Shapps, Secretary of Energy Security, said the change would “put a spotlight on rip-off retailers to drive down prices”.

But AA says it has been calling for this type of price tracking for more than a decade, when it first investigated similar schemes in Austria and Denmark.

“Unfortunately, it took more than 15 years for governments and competition watchdogs to recognize this and do something about it,” said spokesman Luke Bodset.

However, he said access to immediate prices would be a “big leap forward” and should be there by the end of the year.

“Drivers will be attracted to cheaper gas stations and that will put pressure on others to lower their prices, thereby stimulating a level of competition that has been lost over the last three years.”

On Monday, the price of unleaded gasoline averaged 143.86p per liter while that of diesel was 145.54p, according to RAC data.

That’s a sharp drop from record highs seen last July, but still above pre-pandemic trends.

The CMA is also investigating complaints that supermarkets are not passing on food price reductions to consumers.

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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