The RAC’s head of policy, Rod Dennis, applauded the low prices as “great news for people making long festive journeys to visit friends and families”. However, he added: “While conditions are clearly better for drivers this Christmas, we’re still conscious that prices at the pumps could be slightly cheaper if retailer margins were lower.”
Dennis’ remarks come in reference to recent comments by Dan Turnbull, the senior director of markets at the Competition and Markets Authority, who recently said that drivers “continue to be squeezed by stubbornly high fuel margins. We therefore remain concerned about weak competition in the sector and the impact on pump prices.”
The most recent data from the CMA shows the mean profit margin for fuel retailers is around 10.2 per cent – two percentage points higher than the long-term average. Supermarket profit margins are much closer at 8.2 per cent, although both are starting to rise again after a drop earlier this year.
In response to the CMA’s comments, the Petrol Retailers Association said fuel prices are “as low as possible in a highly competitive market while grappling with rising costs in the form of business rates, National Insurance, National Minimum Wage and electricity.”
Still, the Labour government continues to enact the previous Conservative administration’s PumpWatch scheme which will force retailers to submit real-time pricing information to encourage greater competition. This will be viewable on the government-developed PumpWatch app, enabling consumers to make informed decisions on where to fill up.
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