The review, which was requested by Business Secretary Kwasi Kwarteng last month after a surge in fuel retail prices, found that the 5 p/litre fuel duty cut that was implemented as part of the UK government’s Spring Statement in late March appeared to ‘have been reflected in prices’ at the pump.

According to the report, the main drivers of increased road fuel prices were the rising cost of crude oil, and a growing gap between the crude oil price and the wholesale price of petrol and diesel – the so-called ‘refining spread’. This refining spread tripled in the last year, growing from 10 p/litre to nearly 35 p/litre. Over the same period, the so-called ‘retailer spread’ (the difference between the wholesale price and the price charged to motorists) fluctuated, but remained about 10 p/litre on average.

The CMA concluded that ‘on the whole, the fuel duty cut appears to have been implemented, with the largest fuel retailers doing so immediately and others more gradually’. However, ‘in light of some of the concerns found and the urgency of the situation’, it has launched a market study that will examine the road fuel market in more depth in order to find out whether there are legitimate reasons for the growing refining spread, and whether the noted disparities in price between urban and rural areas are justified. An interim update will be published in the autumn.

The CMA was also asked by the UK government to advise on possible measures ‘to increase the transparency that consumers have over retail prices’. The review sets out how an open data scheme could help consumers more easily access and compare local pump price information, while creating new commercial opportunities for tech developers. It suggests that there may also be merit in providing more information about pump prices on motorways.

Commenting on report’s publication, the Petrol Retailers Association (PRA) said it was ‘reassured by the findings of the review, which reiterated that there is no evidence that retailers have profited from failing to pass on the fuel duty cut’.

Gordon Balmer, Executive Director of the PRA, said: ‘In recent months, we have seen motoring organisations and politicians attempting to scapegoat petrol retailers. This report exonerates petrol retailers and leaves unanswered questions about the extent to which these critics understand the retail fuel market at all… We are confident that [the report] will reassure motorists that petrol retailers are doing their best to keep their communities fuelled and fed, while operating on tight margins.’ He added: ‘We hope the CMA’s market investigation will lead to a more grown-up debate about how to achieve the best prices for drivers.’

Meanwhile, a spokesperson at the UK Petroleum Industry Association (UKPIA) added: ‘At a time when the cost of living is rising, UKPIA understands that recent price increases at the pumps will be a concern for motorists, families and businesses across the UK. As the findings of the review show, the UK typically benefits from a competitive domestic supply chain and prices tend to be most affected by changes in crude oil prices and other supply and demand factors, which have been particularly volatile in 2022. Tax is also a significant cost, which accounts for a large proportion of the pump price. We would note that when fuel duty and tax is excluded, UK petrol and diesel prices have been consistently among the lowest in Western Europe.’

Welcoming the CMA’s report and the commitment to a fuller market review, Simon Williams, fuel spokesman at the RAC motoring organisation, commented: ‘We are particularly pleased to see that the CMA acknowledges the gap between wholesale and retail prices has been widening in recent weeks. Regardless of the reasons for wholesale prices being what they are we continue to believe there is clear evidence, not least in the last week, that major retailers are incredibly slow to pass on falling wholesale costs, yet quick to pass on rising ones. The idea of allowing drivers to more easily compare pump prices near them may also prove beneficial.’

He continued: ‘The question drivers may have, however, is how long the review will take and – crucially – when they might see a change to what they pay every time they fill up. As each day goes by and the cost-of-living crisis is felt ever more keenly, the need for retailers – especially the largest ones – to reflect wholesale prices fairly becomes ever more urgent. We urge the government to ensure it’s in a position to scrutinise the relationship between wholesale and retail prices. And where issues are found, it must be able to take action that quickly leads to fairer prices.’

For more information about the UK fuel retail sector, visit the Energy Institute’s Road fuels collection.