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UK petrol and diesel retailers accused of ‘rocket and feather’ tactics

<span>Photograph: Joe Giddens/PA</span>
Photograph: Joe Giddens/PA

The UK competition watchdog is to deepen a probe into fuel retailers and accused them of “rocket and feather” tactics after drivers faced record pump prices this year.

The Competition and Markets Authority said it had seen “some evidence of rocket and feather behaviour” – when prices shoot up rapidly but come down slowly – this year which had not been evident in previous years, notably on diesel.

The CMA’s intervention comes after the then business secretary, Kwasi Kwarteng, asked the watchdog to urgently review petrol station operators, amid concerns that retailers had not passed on a cut to fuel duty.

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Related: Soaring diesel prices a ‘severe shock’ to UK motorists, says RAC

In July, the CMA’s initial review found that “the fuel duty cut appears to have been implemented, with the largest fuel retailers doing so immediately and others more gradually”.

However, retailers were repeatedly accused of profiteering by not passing on subsequent falls in oil prices to consumers at the pumps.

Petrol and diesel prices hit a series of records over the summer after Russia’s invasion of Ukraine pushed up oil prices.

Prices rose by about 50p a litre from January to July, the biggest jump in fuel prices recorded within one year, and have since fallen by 31p for petrol and 14p for diesel. The gap between diesel and petrol prices has become the largest recorded.

The CMA on Tuesday described 2022 as “the most volatile year for fuel prices since reliable records began”.

The watchdog plans to study whether to further investigate an increase in fuel retailer margins in recent years and whether that was down to competition issues. Margins increased by about 2-3p a litre on diesel and 3-4p on petrol between 2017 and 2021.

The CMA said it had found evidence that prices are likely to be higher at petrol stations where there are few or no competitors nearby – and particularly in areas where there is no local supermarket petrol station.

The CMA’s interim chief executive, Sarah Cardell, said: “It has been a terrible year for drivers, with filling up a vehicle now a moment of dread for many.

“The disruption of imports from Russia means that diesel drivers, in particular, are paying a substantial premium because of the invasion of Ukraine. A weaker pound is contributing to higher prices across the board, too.”

The RAC fuel spokesperson, Simon Williams, said: “While it’s encouraging the CMA has found evidence of ‘rocket and feather’ pricing taking place this year, we believe there was clear evidence of it happening this time last year and in 2018 and 2019.

“Volatility has unquestionably been an issue in fuel pricing since Russia invaded Ukraine but when wholesale prices trend down for weeks at a time drivers should see pump prices do the same at a similar rate – unfortunately our data shows that this is not often the case.”

Luke Bosdet, the AA fuel price spokesperson, said: “One of the features that has become very obvious since the summer has been ‘maverick’ independent fuel retailers, who have often slashed their pump prices way below nearby supermarkets and bigger oil company-supplied sites.

“How they, without the economies of scale of the bigger retailers, have been able to charge much lower prices but say that they can operate at such low levels is something that the CMA will have to consider.”

In July the CMA said it had found “cause for concern in the growing gap between the price of crude oil when it enters refineries, and the wholesale price when it leaves refineries as petrol or diesel”.

However on Tuesday it said that although refining margins had risen it had not seen any reason to worry over levels of competition and that “over the medium term, UK refiners have not earned profits at levels that would give us cause for concern”.