Cost of Living Crisis: An ‘Urgent’ Fuel Market Review Ordered Amid Soaring Pump Prices | Political news

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The government has ordered an “urgent” review by the competition regulator of the fuel market after prices at the pump hit new records.

Business Secretary Kwasi Kwarteng said in a letter to the Competition and Markets Authority (CMA) that there was “widespread concern” about the pace of price rises and public frustration that a reduction in fuel duties announced earlier this year does not always appear to have been passed on.

Mr Kwarteng called for an initial report to be delivered by July 7 along with a longer-term study by the watchdog on how to enhance competition in the market and increase transparency for price consumers.

The intervention comes after the average price of filling a typical car with gasoline exceeded £100 last weekadding to the Cost of life pressure for households already facing skyrocketing energy bills as well as rising food expenditure.

Fuel prices soared after the invasion of Ukraine by Russia – a major oil producer – which pushed the price of Brent to over $130 a barrel.

The price of oil has since retreated slightly, but among the concerns expressed by Mr Kwarteng in his letter to the CMA is that prices on the forecourts ‘may not fall as much or as fast as they rise’ .

In March Chancellor Rishi Sunak cut fuel taxes by 5p a liter to try to offset the impact and last month the Business Secretary wrote to gasoline retailers to “remind them of their responsibilities” to pass it on to motorists.

Mr Kwarteng then said the CMA was “monitoring the situation closely”.

Meanwhile, motoring groups have urged the government to cut fuel taxes further or pass a temporary fuel VAT cut.

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£100 to refuel the family car

“Drivers should get a fair price for fuel”

In his latest letter, the business secretary acknowledged that global circumstances, including the war in Ukraine and the reopening of economies after lockdowns, had pushed fuel prices up to “unprecedented levels” and that the government had responded with a £5billion support package.

But he added: “Despite this action, there remains widespread concern about the pace of price increases on the forecourt and, that prices are not falling as much or as fast as they are rising.

“Britons are rightly frustrated that the £5billion package does not always seem to have been passed on to forecourt prices and that in some towns prices remain higher than in nearby similar towns.

“Drivers should enjoy a fair price for fuel across the UK.

“Healthy competition between forecourts is essential to achieve this, with competition working to keep pressure on prices.

“For these reasons, I am writing to request that the CMA conduct an urgent review of the fuels market, as well as longer-term market research.”

Business Secretary Kwasi Kwarteng said a £9.1billion support package had already been outlined
Image:
Kwasi Kwarteng has called for an urgent review of the fuel market

“Very worrying” fuel price hikes

In this context, Mr. Kwarteng asks “the CMA’s opinion on the extent to which competition has led to the transmission of the reduction in fuel taxes to consumers and the reasons for local variations in the price of road fuel”.

CMA chief executive Andrea Coscelli said: “The increases in fuel prices over the past few weeks will be extremely worrying for millions of drivers across the UK, so we understand the government’s concern over the perception that the reduction in fuel taxes is not passed on to drivers.

“The CMA stands ready to act if competition does not work properly or if evidence of unlawful anti-competitive collusion emerges.

“We will engage with industry, automotive organizations and government to ensure that our advice to the Business Secretary is based on the facts.

“Anyone with evidence of competition concerns, collusion or other unlawful anti-competitive behavior should contact us.”

The CMA can provide advice to ministers, but it cannot compel fuel retailers to provide it with information unless it launches formal market research – which can take up to a year.

It can only impose a fine or obtain promises to change behavior from companies if it finds, following a formal investigation, that competition law has been violated.

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