No evidence of widespread fuel price-gouging, watchdog says

The UK’s Competition and Markets Authority (CMA) has found no substantial evidence to suggest widespread price-gouging by fuel retailers in the weeks following the onset of the US-Israel war with Iran. The CMA noted that profit margins across the sector remained "broadly unchanged" from February to March.

In light of the Middle East conflict, which resulted in a sharp surge in wholesale prices, the CMA had previously announced an escalation in monitoring of petrol and diesel pricing.

During this period, Prime Minister Sir Keir Starmer indicated that the government would be prepared to intervene if it appeared that fuel companies were attempting to exploit customers, although petrol retailers refuted allegations of price-gouging, expressing concern over the use of "inflammatory language" surrounding the issue.

The findings from the CMA suggest that there has not been a widespread trend of elevated margins among retailers—the difference between the price at which retailers purchase fuel and the price at which they sell it—since the conflict commenced. However, the CMA did identify that fuel margins had increased between February and March for two supermarket chains and three non-supermarket retailers.

CMA Chief Executive Sarah Cardell stated, "We are investigating why and will report further in May." She emphasized that the regulator's findings should be viewed within a context of "historically high" fuel margins for retailers, indicating ongoing concerns regarding the level of competition within the fuel retail market.

The CMA attributed the rapid increase in fuel costs for UK drivers to broader cost pressures, particularly rising oil prices. Approximately 20% of the world’s oil and liquefied natural gas (LNG) typically transits through the Strait of Hormuz, which has been largely obstructed for two months, contributing to skyrocketing global energy prices.

This week, the price of Brent crude oil surged to its highest level since 2022, exceeding $126 (£94) per barrel at one point. In her remarks, Cardell assured that the CMA would remain "vigilant" to ensure that any decrease in wholesale costs would be passed on to drivers.

Furthermore, the CMA stated it would evaluate the responsiveness of fuel prices to changes in wholesale costs, including the potential phenomenon of "rocket and feather" pricing. Past investigations had revealed evidence of such pricing behavior following Russia's invasion of Ukraine in 2022, where retail prices increased rapidly with rising wholesale costs but declined more slowly when wholesale prices fell.

Additionally, the CMA indicated in March that it was scrutinizing heating oil prices after receiving numerous troubling reports from consumers reliant on heating oil regarding their experiences with retailers.