A new fuel finder scheme to enable drivers access to live, station-by-station fuel prices on their phones or satnavs would help revitalise competition in the retail road fuel market, according to the Competition and Markets Authority (CMA).
The scheme would be made possible by new compulsory open data requirements and backed by a new ‘fuel monitor’ oversight body. The proposals are the key recommendations by the CMA to UK government following its in-depth study into the road fuel market which found a weakening of competition in retail since 2019.
At present, retailers only provide information on prices at the petrol stations themselves, making it hard for drivers to compare prices and weakening competition.
The fuel finder open data scheme would need statutory backing through legislation to ensure fuel retailers provide up-to-date pricing and make that available to drivers in an open and accessible format that can be easily used by third-party apps such as satnavs or map apps, through a dedicated fuel finder app, or a combination of both.
The fuel monitor would monitor prices and margins on an ongoing basis and recommend further action if competition continues to weaken in the market.
Over the past year, the CMA has investigated the road fuel market in detail and reached the conclusion that competition is “not working well and greater transparency in pricing is needed” to improve consumer confidence and bring down prices for drivers.
There is no evidence to suggest that there has been cartel behaviour taking place, the CMA said.
The report also found that:
- From 2019-22, average annual supermarket margins have increased by 6 pence per litre (PPL).
- Increased margins on diesel across all retailers have cost drivers an extra 13 PPL from January 2023 to the end of May 2023.
- With greater transparency and shopping around as effectively as possible, the driver of a typical family car could save up to £4.50 a tank within a 5-minute drive.
- Motorway service stations are charging around 20 PPL more for petrol and 15 PPL more for diesel compared to other fuel stations.
Sarah Cardell, Chief Executive of the CMA, said: “We need to reignite competition among fuel retailers and that means two things. It needs to be easier for drivers to compare up-to-date prices so retailers have to compete harder for their business. This is why we are recommending the UK government legislate for a new fuel finder scheme which would make it compulsory for retailers to make their prices available in real-time. This would end the need to drive round and look at the prices displayed on the forecourt and would ideally enable live price data on satnavs and map apps.
“Given the importance of this market to millions of people across the UK this needs to be backed by a new fuel monitor function that will hold the industry to account. As we transition to net zero, the case for ongoing monitoring of this critical market will grow even stronger, so we stand ready to work with the UK government to implement these proposals as quickly as possible.”
In addition, the CMA identified that there are significant price differences in local areas, and that the difference between the highest and lowest prices in local areas has increased as average fuel prices have risen. Lower prices are typically associated with having a supermarket retailer nearby, and where there are no supermarkets, for example, in remote areas, fuel retailers are likely to have higher costs and prices are likely to be higher.
The CMA also found the price premium at motorway service stations has grown in real terms since 2012, and price variation on motorways is low, due to limited competition between service stations. A fuel finder scheme would allow drivers an easy way to see where they can find cheaper fuel in the area if they come off the motorway.
In response, ACS Chief Executive James Lowman, said: “We welcome the CMA’s recommendations on transparent pricing for consumers, but this must be achieved without placing unnecessary and disproportionate burdens on fuel retailers, especially independents operating the smallest businesses.”
Gordon Balmer, Executive Director of the Petrol Retailers Association, said the trade body welcomes the government’s commitment to transparency and will support any “sensible” steps taken to help motorists find the best deal available to them.
He added: “We will continue to engage with officials to ensure that this scheme is rolled out efficiently. The logistics surrounding fuel pricing are complicated and it is vital that the government consult with industry to ensure a smooth implementation.”
