Petrol rip-off as drivers still 'over-paying' by up to £7 a tank

Motorists are being ripped off at the pumps with retailers pocketing inflated profits despite falling wholesale fuel costs.

The Competition and Markets Authority (CMA) has warned that fuel margins - the difference between what retailers pay for petrol and diesel and what they charge at the pump - remain significantly above historic levels, indicating weak competition across forecourts.

Despite petrol prices dropping by 7.6p per litre and diesel by 8.4p between February and May this year, average profit margins remain stubbornly high.

For unleaded, the average retail spread - the gap between what retailers pay and what they charge customers - stood at 15.4p per litre. That's more than double the pre-pandemic average of just 6.5p. For diesel, it was even worse at 18.8p per litre, also more than double the long-term average of 8.6p.

In real-world terms, that means drivers filling up a 55-litre family car are being charged around £5 to £7 more per tank than they would have been under normal pre-2019 margins.

Dan Turnbull, senior director of markets at the CMA, said: "While there is uncertainty over how global events will impact the price of oil, our report shows fuel margins remain high compared to historic levels despite lower prices at the pump in recent months.

"The Government committed to launching a 'fuel finder' scheme following our recommendation to help drivers compare real time prices and boost competition. Once launched, it will make it easier than ever to shop around and find the best deals."

The report found that supermarket fuel margins, though slightly lower than other retailers, have also risen in recent months - from 7.9% in February to 8.3% in March. Non-supermarket forecourts saw an even sharper jump, up from 8.9% to 10.4% over the same period.

Simon Williams, head of policy at the RAC, said: "Drivers will be concerned to hear that retailer margins on fuel are still above where they have been historically and that competition remains weak.

"Given fuel is a major expense for households, and with eight-in-10 drivers dependent on their cars, it's disappointing to see they've paid over the odds yet again.

"We have to hope the launch of the government-backed Fuel Finder scheme, due at the end of the year, will stimulate competition and finally lead to fairer pump prices.

"In the meantime, drivers should use a price checking tool, such as the free myRAC app, to make sure they're getting the best deal possible wherever they are."

The CMA said it would carry out a fuller analysis of fuel retailers' operating costs later this year to determine whether rising business expenses are being used to justify excessive margins.

The planned Fuel Finder tool - expected by the end of the year, subject to legislation - would allow drivers to compare real-time prices via apps, satnavs and websites, potentially injecting some much-needed competition into a stagnant market.