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Competition watchdog finds evidence of 'rocket and feather' fuel pricing

Evidence of 'explosive' prices in 2022: Competition watchdog found examples of retailers this year not passing fuel savings on to drivers as quickly as they should

A monitoring survey of the amount drivers are charged for refueling found examples of ‘rocket and feather’ prices this year.

The Competition and Markets Authority (CMA) said it was the “most volatile” year for fuel prices since reliable records began, seeing pump costs rise by around 50p a liter from January to July – the biggest jump in a year – before falling 31p for petrol and 14p for diesel.

He said he had found “evidence” that retailers in 2022 were rapidly raising prices at the pump in response to rising wholesale fuel costs – the “rocket” – but then did not. failed to pass on the savings when those costs had dropped – the “feather”.

Today’s CMA update identified that retailers are pocketing bigger margins than before as it continues its investigation into gasoline prices.

Evidence of 'explosive' prices in 2022: Competition watchdog found examples of retailers this year not passing fuel savings on to drivers as quickly as they should

Evidence of ‘explosive’ prices in 2022: Competition watchdog found examples of retailers this year not passing fuel savings on to drivers as quickly as they should

He said the difference between the price paid by retailers for fuel and the price at the pump increased from 2017 to last year between 3 and 4p per liter for petrol and between 2 and 3p for diesel.

The CMA said the cause of this was “not yet clear”, saying it “could be explained by further cost increases for retailers or weaker fuel competition”.

Her analysis also “saw evidence” of rocket and feather behavior emerging this year, although she had found no such instances in the previous four years.

He said that was particularly the case with diesel, as retailers failed to pass on lower wholesale costs to forecourts.

“This could be due to extreme price and supply volatility in 2022,” the CMA said.

Both areas will continue to be studied under the ongoing project.

Earlier this year, the government ordered the CMA to carry out an urgent market review to understand whether the March fuel tax cut announced by then-Chancellor Rishi Sunak had been passed on by the industry to hardened motorists.

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He concluded that the growth in oil refining margins for a sharp rise in fuel prices in the aftermath of the duty cuts, but pledged in July to carry out a thorough price investigation on the forecourts, including examining why petrol and diesel are more expensive in some regions than in others.

This included the analysis of company-level financial data, from retailers, refiners and wholesalers, reviewing records for the last five years.

Today’s update pointed out that the cost of filling “varies significantly” between local areas, blaming higher prices for regions where there are few – or no – competitors nearby, and in particular where there is no local supermarket gas station.

He pledged to investigate further.

Profit margins for retailers in 2022 are wider than they have been in the previous four years, rising by 3 to 4 pence per liter for petrol and 2 to 3 pence for diesel, said the CMA.

Profit margins for retailers in 2022 are wider than they have been in the previous four years, rising by 3 to 4 pence per liter for petrol and 2 to 3 pence for diesel, said the CMA.

The watchdog also found that the gap between diesel and petrol prices had become “wider than ever reliably recorded”, with diesel now costing around 24p more per liter than unleaded.

This is largely due to Western Europe’s reliance on diesel imports from Russia, according to the CMA.

The watchdog’s acting chief executive, Sarah Cardell, said: ‘It has been a terrible year for drivers, with filling up a vehicle now being a time of dread for many.

“The disruption of imports from Russia means diesel drivers, in particular, are paying a substantial premium due to the invasion of Ukraine.

“A weaker pound also contributes to higher prices across the board.

“There are no easy answers to this.”

Drivers are ready for more expensive time on the roads this Christmas than it should be

Simon Williams, RAC Fuel Spokesperson

Ms Cardell added that the CMA was examining whether a ‘lack of effective competition’ in the UK was ‘making matters worse’ for drivers.

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The RAC said while it was “encouraging” that the CMA found evidence of “rocket and feather” pricing this year, it believes there is “clear evidence” of it happening in 2021, 2019. and 2018.

The car group has already pointed the finger at the ‘big four’ supermarkets ‘hanging on massive markups for dear life’ after the pandemic, and says the market should bring instant relief to drivers this month as many intend to hit the road over the festive period.

Its fuel spokesman, Simon Williams, said: “Volatility has definitely been an issue in fuel pricing ever since Russia invaded Ukraine, but when wholesale prices drop for weeks on end , drivers should see pump prices do the same at a similar rate – unfortunately our data shows that this is often not the case.

“What is happening now – like last December – is a massive drop in wholesale fuel prices with a slow drop in forecourt prices.

“As a result, drivers are set for more expensive time on the roads this Christmas than it should be.

“Wholesale petrol prices fell from 130p a liter in early October to 109p yesterday – a drop of 21p.

“Meanwhile, the average unleaded price at the end of October peaked at 166.88p, but has so far only fallen 8p to 158.91p.

“The situation with diesel is even worse as it has fallen by 33p over the same period, but the average retail price was down only 8.4p yesterday from 191.12p to 182.71p,” a- he added.

“We strongly urge larger retailers to lower their prices. Unfortunately, we fear they will hold out, hoping for a rise in the price of oil later this month.

How to save fuel while driving

Using very simple eco-driving techniques ‘can easily save the equivalent of 9p per litre’, says the AA.

For motorists desperate to get the most out of the expensive fuel they’re currently pumping into their cars, we’ve compiled our top 10 tips for driving as efficiently as possible.

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> Top 10 tips to drive efficiently and help you save money on fuel costs

The AA said it was long overdue to focus on the pump-priced postcode lottery, saying it had records of “big price differences between communities that are literally down each other others”.

Luke Bosdet, its fuel expert, added: “Huge spikes in pump prices have been a major contributor to the inflation that has hammered UK consumers.

“A major concern has been how quickly fuel retailers have reacted to wholesale price volatility, both up and down.

“The driver perspective is that pump prices are rising much faster than they are falling in response to wholesale price changes.”

Howard Cox, founder and leader of the FairFuelUK campaign, said he was “delighted” that the CMA is continuing to investigate the fuel industry.

‘Hallelujah, but why did it take them so long to come to this conclusion?

“Millions of drivers will struggle to see how the CMA fails to recognize that profit remains endemic in the fuel supply chain,” he said.

“The swindling of consumers and the economy has not only been extremely evident over the past three years, but on numerous occasions throughout the past decade.

“However, it is nice to see that the CMA has finally granted ‘rocket and feather’ awards at the pump, but only for 2022.

“Ask any driver, they’ll tell you it’s been going on for years.”

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