UK drivers are paying too much for petrol and diesel because fuel prices are not falling in line with global oil prices, according to the UK’s consumer watchdog.
The Competition and Markets Authority (CMA) said fuel retailers are charging more than they should and rejected claims that higher running costs are the reason for high pump prices.
Petrol stations have argued that they cannot cut prices because costs such as staff wages and energy bills have gone up. But the CMA said its research shows this is not true.
The watchdog found that fuel retailers are still making strong profits on fuel, and their overall operating profits are also higher than normal. This means higher costs do not explain why prices at the pump remain high.
Dan Turnbull, senior director at the CMA, said fuel profit margins are still very high and competition in the fuel market is weak. He said that if competition were working properly, drivers would be paying less for fuel.
Motoring groups the AA and RAC said the report confirms that drivers are being overcharged.
RAC policy head Simon Williams said the CMA has clearly rejected the reasons given by fuel retailers for keeping prices high.
The AA pointed out that the wholesale price of petrol has fallen by more than 7 pence per litre since the end of November. With VAT included, this should mean a saving of about 8.4 pence per litre, or around £4.60 for a full tank. However, the average pump price has dropped by less than 1 penny.
The AA said this is an example of “rocket and feather” pricing. This means fuel prices rise quickly when costs go up, but fall very slowly when costs come down.
The CMA said in September that it was very concerned about fuel overcharging, but at that time had not fully studied how operating costs were affecting retailers.
In its latest report, the CMA said average fuel prices have fallen over the past year. Petrol is now around 135 pence per litre and diesel about 142 pence per litre, both around 8 pence cheaper than last year. This drop is mainly due to lower oil prices, better exchange rates, and lower refining costs.
However, the watchdog said prices have not fallen as much as they could have, especially at non-supermarket petrol stations. These retailers have kept fuel profit margins at very high levels.
To help drivers, the CMA will launch a “fuel finder” scheme next year. This will allow drivers to see and compare fuel prices in real time using apps, sat-nav systems, and comparison websites.
Turnbull said fuel costs are a major concern for drivers, especially during busy travel periods. He said the new scheme will help drivers find cheaper fuel and save money.
Published: 23th December 2025
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