Spring Statement: Rishi Sunak announces fuel duty cut
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An investigation has been launched by the Competition and Markets Authority (CMA) after its “urgent review” of the industry found “cause for concern in the growing gap” between crude oil and the price of fuel on forecourts. The review into the prices by companies like Shell, BP, Esso, Total and others on British forecourts had been demanded by Business Secretary Kwasi Kwarteng amid growing alarm on the impact on the cost of living.
The review followed demands by MPs for the Government to take action against “rip-off prices” on forecourts with question marks over whether the fuel duty cut announced by former Chancellor Rishi Sunak had been passed on.
While the CMA concluded that the 5p cut in fuel duty is reflected in the prices on forecourts, it noted that refining spread had added an enormous 24p per litre to overall costs.
The review found that the main drivers of increased road fuel prices were “the rising cost of crude oil; and a growing gap between the crude oil price and the wholesale price of petrol and diesel – the so-called ‘refining spread’”.
The rate of cost rises tripled over the last year by as much as 35p a litre the review found.
Worryingly it also concluded that there is a postcode lottery with people living in rural areas pay much higher prices.
The report noted: “There are significant differences in price between many rural and urban areas.”
In light of some of the concerns found and the urgency of the situation, the Competition and Markets Authority (CMA) has today launched a market study that will examine the road fuel market in more depth, “making full use of its compulsory information gathering powers.”
An interim update will be published in the autumn.
Sarah Cardell, CMA General Counsel, said: “The recent rises in pump prices are a major worry for millions of drivers.
“While there is no escaping the global pressures pushing up fuel prices, the growing gap between the oil price, and the wholesale price of petrol and diesel, is a cause for concern.
“We now need to get to the bottom of whether there are legitimate reasons for this and, if not, what action can be taken to address it.”
In his response, Mr Kwarteng welcomed the new study.
He said: “We understand the difficulties the public are experiencing with the cost of living and have announced £37 billion of support this year alone to help families through it.
“However, the cost of road fuel remains a significant part of household and business expenditure. With this in mind, it is essential that competition works to keep prices down.
“The Government therefore fully supports the CMA in its further work on this important issue, and will await these findings.”
The issue has already had a political impact with Lib Dem Richard Foord winning the Tiverton and Honiton by-eklection, a seat held by the Tories since before Queen Victoria came to the throne, partly on a promise to cut fuel prices in rural areas.
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