Shell fuel prices

The Competition Markets Authority (CMA) has agreed to conduct a swift, high-level review of competition in the fuel retail market following a request by the Kwasi Kwarteng, Secretary of State, Department for Business, Energy & Industrial Strategy (BEIS) at the weekend.

The CMA will also consider what further work may be necessary, including whether a market study would be appropriate. 

The initial report is due on July 7


The announcement follows a letter from Kwarteng to Dr Andrea Coscelli, chief executive of the CMA, at the weekend, requesting an urgent review of the fuel market, following concerns drivers aren’t getting a fair deal for fuel across the country.

As average fuel prices continue to achieve new records with the latest average figures showing petrol at 185.04ppl and diesel 190.92ppl, Kwarteng said that ”unique circumstances globally”, including Russia’s illegal invasion of Ukraine and economies unlocking after Covid, had pushed pump prices up to unprecedented levels. But despite cutting fuel duty on petrol and diesel in a £5 billion pacakge, there remains “widespread concern” about the pace of the increase in prices at the forecourt and, that prices may not fall as much or as fast as they rise. 

He referred to motorists being ”rightly frustrated that the £5bn package does not always appear to have been passed through to forecourt prices and that in some towns, prices remain higher than in similar, nearby towns.

”Drivers should be getting a fair deal for fuel across the UK,” he wrote.

”Healthy competition between forecourts is key to achieving this, with competition working to keep pressure on prices. For these reasons, I am writing to you to ask that the CMA conduct an urgent review of the fuel market, as well as a longer-term market study under the Enterprise Act 2002, to explore whether the retail fuel market has adversely affected consumer interests. This should consider the health of competition in the market, geographical factors, including localised competition, and any further steps that the Government or the CMA could take to strengthen competition, or to increase the transparency that consumers have over prices. As part of this, I would be grateful for the CMA’s advice on the extent to which competition has resulted in the fuel duty cut being passed on to consumers, and the reasons for local variations in the price of road fuel.”

His letter followed on a previous letter on May 17 to fuel retailing organisations, including the PRA, UKPA, and UK and Ireland Fuel Distributors Association calling on them to do everything possible to ensure that drivers are getting a fair deal.

Coscelli replied this morning agreed to a “short and focused” review of the fuel market and to provide advice to the UK Government on steps that might be taken to improve outcomes for consumers across the UK.

She agreed that global factors, including the war in Ukraine, have been the principal driver of recent trends. But if competition is not working well in the retail fuel market, pump prices will be even higher than they need to be.

”With that in mind, the CMA will, as you request, carry out a short and focused review of the market, and provide advice to government on steps that might be taken to improve outcomes for consumers across the UK.”

She said the CMA would engage with industry stakeholders and motoring organisations ”to ensure that our analysis and conclusions are based on solid evidence”;  and would ”continue to urge anyone with evidence of business cartels or other illegal anti-competitive behaviour to come forward”.

”Once our short review is complete, and taking into account its findings, the CMA Board will consider what further work may be necessary, including whether a market study is appropriate.”