Britain’s drivers are facing persistently high petrol and diesel prices at the pumps unfairly.

New government data and watchdog analysis suggest motorists are being charged far more than necessary — even as global oil costs ease.

A report from the Competition and Markets Authority (CMA), just published, reveals that fuel retailers’ profit margins remain “far above historic levels,” raising fresh concerns that drivers are being overcharged and that competition in the sector is weak.

In the tank

The CMA’s annual road fuel monitoring report found that between May and August 2025, the average price of petrol in the UK rose to 133.9 pence per litre (ppl) and diesel to 141.9ppl, marking increases even as wholesale oil prices have fallen.

What experts describe as “retail spread”, the gap between what retailers pay for fuel and what drivers pay at the pump, remains more than double the average seen in the mid-2010s, suggesting that motorists are not benefiting fully from recent drops in wholesale prices.

The heart of the watchdog’s concern lies in fuel margins, essentially retailers’ profit on each litre sold.

While supermarkets and independent forecourts have blamed rising operating costs such as wages and energy, the CMA’s analysis indicates these explanations do not fully justify current profit levels.

Instead, elevated margins indicate weak competition among retailers, suggesting drivers could be paying significantly more than necessary.

 

Miles per gallon

Motoring groups have been quick to weigh in.

The AA described the findings as evidence that drivers are being “taken for a ride,” criticising the so-called “rocket and feather” pricing pattern, where fuel prices jump quickly when wholesale costs rise but fall slowly when they drop.

An AA spokesperson said that although wholesale petrol prices have fallen by more than 7p per litre, retail petrol prices have barely budged, underscoring drivers’ sense of being short-changed.

The RAC has echoed these concerns, urging retailers to pass on lower wholesale costs at the pumps and proposing that, if pricing were more competitive, drivers could save around 6p per litre,  potentially translating into significant savings for families and commuters alike.

Fill it up

Quantifying how much motorists have overpaid is challenging because it depends on the comparison baseline used.

However, earlier CMA research found that drivers collectively paid an estimated £1.6 billion more in fuel costs than they would have if margins had remained at historic norms.

That overcharge stems from margins rising sharply since 2019, and the watchdog and motoring groups argue that these points squarely point to retailer pricing practices rather than underlying costs.

Responding to the CMA’s findings, Dan Turnbull, Senior Director of Markets at the watchdog, stressed that the planned “fuel finder” scheme, due to launch in 2026, will help motorists compare real-time prices more easily and boost competition.

“Fuel margins remain at persistently high levels, and our analysis shows operating costs do not explain this,” Turnbull said. “This indicates competition in the sector is weak; if it were working well, drivers could see lower prices at the pump.”

Running low

Petrol retailers have defended their pricing, pointing to ongoing cost pressures including staff wages, energy and service operations.

The Petrol Retailers’ Association has maintained that the combination of global market volatility and increased non-fuel costs contributes to prices that may appear high even when wholesale costs fall.

Government officials have welcomed the CMA’s recommendations and said the forthcoming fuel finder tool and continued sector monitoring will help empower drivers.

In the Autumn Budget, the government also froze fuel duty until 2026, a measure it says provides some relief to motorists.

 

On the forecourt

As UK drivers prepare for peak travel periods over the winter and holiday season, the CMA’s data underscores growing frustration over forecourt costs, as many households already feel the squeeze from rising living costs.

With both motoring organisations and the competition authority calling for a more competitive fuel retail market, drivers will be watching closely to see whether promised reforms genuinely deliver cheaper fuel at the pumps.