How does new law allow the Competition and Markets Authority to scrutinise fuel prices?

A new law granting the Competition and Markets Authority (CMA) the authority to examine road fuel prices took effect on 24 May 2024. This legislation aims to ensure fairer fuel pricing across the UK and provide transparency for consumers.

The RAC has expressed strong support for this move. They believe that if major retailers adjust their margins fairly, fuel prices across the UK mainland could match the consistently lower prices in Northern Ireland. This would eliminate the postcode lottery, where fuel costs vary significantly between different forecourts.

The new powers are also expected to address 'rocket and feather' pricing. This practice sees fuel prices rise quickly with increasing wholesale costs but fall slowly when those costs decrease. Additionally, diesel vehicle drivers, who often face higher charges, may see more balanced pricing as diesel margins subsidise petrol prices.

Rod Dennis, RAC Senior Policy Officer, stated: “The CMA now has the powers it needs to take a closer look at what’s going on across the country when it comes to fuel retailing. In the short term, this should mean greater visibility of pump prices for drivers – and the far fairer prices that those in Northern Ireland continue to enjoy. But crucially, it should also mean it can identify occasions where wholesale price drops aren’t being properly reflected at the pumps, something our analysis shows is sadly still happening."

With the General Election looming, the next government will face decisions about the temporary cut in fuel duty. Despite the intended relief from high refuelling costs, UK fuel prices remain among the highest in Europe. Diesel prices in particular continue to top the charts, with petrol also ranking in the top ten most expensive.

Dennis added: “What’s more, whichever party takes power after next month’s General Election will have the prickly job of deciding what to do about the supposedly temporary cut in fuel duty. Looking at the UK’s current pump prices, it’s easy to forget this cut is meant to ease the cost of refuelling right now. As a result of the energy price crisis, many governments across Europe have since increased their duty rates again after previously helping drivers. Yet in the UK, diesel prices are still higher than anywhere else on the continent and petrol prices are still among the top-10 most expensive.”