Watchdog urged to carry out urgent review of fuel duty reduction amid rising petrol prices
Business Secretary Kwasi Kwarteng urged the UK competition watchdog to carry out an urgent review to determine whether a 5p reduction in fuel tax is passed on to drivers quickly enough. He would have asked the Competition and Markets Authority (CMA) to examine the fuel market and whether there are local variations in petrol and diesel prices.
It comes as the cost of filling an average family car has now hit a record £100. The CBI has warned that households will enter recession later this year, reports the BBC. The Petrol Retailers Association, which represents independent fuel retailers, said it “welcomes transparency around fuel prices”.
Fears over oil supplies due to Russia’s invasion of Ukraine have seen pump prices rise steadily since February. The average price of a liter of petrol on UK forecourts hit a new record high of 183.2p on Thursday, according to data firm Experian.
That was an increase of 0.9 pence from Wednesday. The average cost of filling a typical 55-litre family car topped £100 for the first time on Wednesday.
The average price of a liter of diesel on Thursday was also a record, at 188.8p. The AA’s analysis indicated that high streets are losing £23million a day in potential consumer spending due to increased fuel expenditure by private motorists.
In a letter to CMA, Mr Kwarteng said that despite the introduction of a fuel duty reduction “there remains widespread concern about the pace of price increases on the forecourt and that prices may not fall as much or as fast as they increase”. As well as examining whether the duty reduction is passed on to consumers, Mr Kwarteng also asked the CMA to consider “whether the retail fuel market has harmed consumer interests”.
This will include investigating changes in petrol and diesel prices in local forecourts. “Drivers should enjoy a fair price for fuel across the UK,” said Mr Kwarteng. “Healthy competition between forecourts is key to achieving this, with competition working to keep pressure on prices.” He asked the AMC to report back to him by July 7.
The Petrol Retailers Association says its members embraced the 5p fuel tax cut after it was announced in March. However, wholesale fuel prices have continued to rise since then.
That and other pressures have left retailers “operating on extremely tight margins,” he says. Boss Gordon Balmer said the association had requested several meetings with Mr Kwarteng “to explain how the fuel market works”, but had received no response.
“Our members have had to endure many [unfair] headlines,” he added. “Therefore, the news that the Minister has contacted the CMA to carry out an urgent review of the fuels market is timely.