At first glance, Kwasi Kwarteng’s order that the Competition and Markets Authority (CMA) conduct an inquiry into retail fuel prices looks politically desperate. The reason the government’s 5p-a-litre cut in duty has not been noticed by consumers feels intuitively obvious: wholesale prices have risen; and 5p, in the context of 185p-ish at the pumps, is not a gamechanger, especially when 45% of the price represents taxes still in place. Case closed?
Well, maybe not. Even former insiders in the petrol retailing game say privately that competitive tensions in the market feel less than intense. In previous episodes when pump prices have been front-page news, supermarkets, who collectively represent half of the market, have reacted with promotions along a “spend £50 in store and get 10p a litre off when you fill up” theme. The offers are never as generous as they sound (the supermarkets’ arithmetic is carefully calibrated) but they have a dampening effect on prices to some degree. Such activity has been virtually absent this time.
