Today's interim monitoring report sets out the Competition and
Market Authority's (CMA) observations on developments in the road
fuel retail market since the previous update in November 2024.
Dan Turnbull, Senior Director of Markets at the CMA, said:
While there are several factors contributing to the higher fuel
prices seen in recent months, fuel margins remain stuck at high
levels which impacts prices paid by drivers at the pump.
The ‘fuel finder' scheme set to launch this year should be a game
changer for drivers – allowing them to find the cheapest fuel
prices while boosting competition between fuel retailers.
Fuel prices
Fuel prices increased for both petrol and diesel from October
2024 to February 2025. These movements reflect in part changing
crude oil prices and refining spreads, both of which are driven
by global factors.
The average petrol and diesel prices at the end of February were
139.6 and 146.8 pence per litre (ppl) respectively. This
represents an increase of 5.2 ppl and 7.1 ppl in petrol and
diesel prices than the previous four months.
Fuel margins
A retailer's fuel margin is the difference between what it pays
for fuel and sells it at. In this update, the CMA found that fuel
margins were similar to the high levels seen during its road fuel market study - a
review of the market to understand the factors influencing fuel
prices undertaken between 2022 and 2023.
Supermarket fuel margins decreased from 8.6% in September 2024 to
8.2% in November 2024 before peaking at 8.9% in December 2024.
Non-supermarket fuel margins decreased from 10.6% in September
2024 to 9.1% in November 2024 before rising to 9.8% in December
2024.
Fuel margins remain high compared to historic levels, which
suggests that overall competition in the road fuel retail market
remains weak.
Retail spreads
The CMA also looked at the retail spread – the average price that
drivers pay at the pump compared to the benchmarked price that
retailers buy fuel at – over October 2024 to February 2025.
Petrol retail spreads in the four months to end-February averaged
13.8ppl, which was 1.1ppl lower than over the previous four-month
period – but still more than double the average of 6.5ppl over
2015 to 2019. Diesel retail spreads averaged 13.4ppl, which was
2.9ppl lower than the previous four-month period, but still more
than the average of 8.6ppl in 2015 to 2019.
While spread analysis can give a quick overview of trends in the
sector, it is a less reliable indicator of competitive intensity
than individual retailers' fuel margins. Retail spreads increase
and decrease in response to the volatility of wholesale prices
but should return to a normal range over time.
Road fuel market study
At the end of its road fuel market study, the CMA recommended a new
monitoring function and fuel finder scheme. The previous
government accepted those recommendations and determined the CMA
would take on the new statutory monitoring function. The new
government has since confirmed its commitment to both these
measures.
The fuel monitoring function will provide ongoing scrutiny of
prices to encourage effective competition between retailers and
help keep prices low for drivers. This update is based on data
provided voluntarily by fuel retailers – the next update will
include data gathered using our new information gathering
powers.
The ‘fuel finder' scheme will allow drivers to compare real-time
fuel prices, via navigation apps, in-car devices and comparison
websites. The government's aim is to launch the scheme by the end
of this year, subject to legislation and parliamentary time.
Notes to editors
- The CMA has used information requested on a voluntary basis
from major fuel retailers, including: Applegreen-Petrogas, Asda,
BP, Esso, Euro Garages, Morrisons, Moto Hospitality, Motor Fuel
Group, Rontec, Sainsbury's, Shell, Tesco, and Welcome Break. The
next report will use data based on information requests to fuel
retailers using the CMA's new formal powers under the Digital
Markets, Competition and Consumers Act 2024.
