Why drivers could be paying more for fuel than they should
Drivers who find profit margins remain “persistently high” and unexplained may be paying more for fuel than they need to, according to the UK’s competition watchdog.
The Competition and Markets Authority (CMA) reported that although pump prices have fallen on an annual basis, fuel companies’ profit margins have increased inexplicably due to operating cost pressures. This explanation is an explanation used by fuel companies.
He added that profit margins show that competition in the industry is “weak” and therefore pump prices have not fallen as much as they could.
The analysis comes ahead of the government’s plans to introduce a “fuel finder” tool in 2026 that will allow drivers to compare real-time fuel prices.
The CMA said it would take action against retailers who did not provide data to the system.
Dan Turnbull, senior market director at the CMA, said: “Fuel margins remain at consistently high levels and our new analysis shows that operating costs do not explain this.
“This shows that competition in the industry is weak; if it was working well, drivers would see lower prices at the pump.
“We know fuel costs are a big issue for drivers, especially as millions of people travel across the country.
“That’s why the fueling scheme is vital – it will put power back into the hands of drivers and save households money.”
According to the CMA, fuel prices have fallen due to falling wholesale costs; The average petrol price stood at 135p per liter between November 2024 and October 2025. This figure was 143 pence per liter in the same period the previous year.
The average price of diesel between November 2024 and October 2025 was 142 pence per litre; the previous year it was 150p per litre.
But retailers’ profits from fuel sales are rising and remain at historically high levels.
The CMA first warned of rising profit margins in early 2025 but said in its latest report that it did not believe operating costs were the reason retailers were increasing profit margins and that competition had not strengthened since its last market survey in 2023.
Wholesale costs have fallen by more than 7p per liter since the third week of November, but the average price of petrol at the pump has fallen by just two-thirds, the AA said.
A spokesman for the AA said: “This is classic ‘rocket and feathers’ pricing for the pumps and a disaster for British motorists.
“This time it comes as millions of motorists hit the roads for Christmas and are being overcharged for fuel.”
RAC head of policy Simon Williams added: “Unfortunately, many motorists will not be surprised to hear that they are still paying too much for their fuel, especially given the complaints we have received about huge price differences from location to location.
“The trade association for fuel retailers claimed that rising operating costs were the reason for higher average margins on petrol and diesel, but this has now been flatly rejected by the CMA, which said it did not explain why fuel margins remained high compared to historical levels.
“We sincerely hope that the new fuel discovery scheme, combined with the CMA’s ongoing review, will lead to increased competition and lower forecourt prices for motorists across the country.”
