Energy Secretary Warns Fuel Retailers to Stop ‘Ripping Off’ Motorists

Cars queue at Tesco near Stanwell, Middlesex, England, on Sept. 27, 2021. (Steve Parsons/PA)

Energy Secretary Grant Shapps has told supermarket and petrol station bosses to stop overcharging motorists for fuel.

The government demanded an “immediate end to overcharging” customers at the pump, said Mr. Shapps, after a call with UK retail executives.

He took to Twitter to announce that he had called on supermarkets and petrol stations to end their “inexcusable behaviour” in ripping off motorists and requested them to hand over their pricing data.

“There is no excuse and the government is saying enough is enough,” Mr. Shapps said in a video announcement.

Drivers have been paying an extra 6 pence per litre (ppl) from 2019 to 2022, which was revealed by the Competition and Markets Authority (CMA). The CMA road fuel market study showed that the surge was driven by increased margins on diesel across all retailers.

The combined additional cost for customers of four supermarket fuel retailers in 2022 alone was £900 million (pdf).

The CMA also found that motorway service stations are charging around 20 ppl more for petrol and 15 ppl more for diesel compared to other fuel stations.

Competition was not working well and customers needed greater transparency in pricing, the study concluded.

The regulator proposed a new fuel finder open data scheme that would enable drivers to access and compare fuel prices live, using a dedicated app on their phones.

Motorists could also use satnavs or map apps to get information on station-by-station fuel prices.

The so-called fuel monitor would check prices and margins on an ongoing basis and detect weakening competition. Currently, retailers only provide prices information at the petrol stations themselves.

“This makes it hard for drivers to compare prices and weakens competition,” the CMA reported.

The fuel monitor will mean that drivers can “find the best deal and be alerted if anyone tries to rip them off again.”

According to Mr. Shapps, retail executives, who have been failing to pass on their savings to customers, have shown support for the fuel finder scheme.

The CMA chief executive Sarah Cardell said that the government should legislate the new fuel finder scheme.

“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,” Ms. Cardell suggested.

Need for Action

Last month, MPs quizzed supermarket bosses on the long and short-term measures their companies are taking to alleviate cost-of-living crisis pressures. Tesco, Sainsbury’s, Asda and Morrisons’ bosses were questioned over the volatility in the fuel market since the start of the war in Ukraine.

Morrisons Chief Executive David Potts agreed with the CMA estimation that supermarkets were profiting more from high fuel prices.

While supermarkets are generally the cheapest places to buy fuel, according to the CMA, Asda and Morrisons targeted higher margins in 2022 and 2023. Retailers, including Sainsbury’s and Tesco, raised their prices in line with these changes.

“Taken together this indicates that competition has weakened and reinforces the need for action,” the CMA reported.

The regulator said that in 2023 Asda was “feathering” its prices, by reducing prices at pump stations slower than the wholesale prices were falling. This cost drivers 13ppl more from diesel in the first half of the year than if margins had been at their historic average.

In remote areas of the country, where drivers don’t have access to a supermarket retailer, fuel prices are likely to be higher. Motorways offer low price variation because of the limited competition between service stations. It is “essential” that the fuel finder scheme “keeps a close eye” on local price variations, said the CMA.

The scheme can become operational, given that the retailers meet the compulsory open data requirements and that a new “fuel monitor” oversight body is formed.