Cost of living crises: An ‘urgent’ assessment of the fuel market is requested

Cost of living crises: An ‘urgent’ assessment of the fuel market is requested

Cost of living crises: An ‘urgent’ assessment of the fuel market is requested

Sri Lanka announces weekly fuel quotas (Credits: Google)

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  • Pump prices reach new highs.
  • The government orders an “urgent” investigation of the fuel industry by the competition regulator.
  • Business Secretary Kwasi Kwarteng expressed “widespread worry” about the rate of price increases.
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After pump prices reached new highs, the government ordered an “urgent” investigation of the fuel industry by the competition regulator.

In a letter to the Competition and Markets Authority (CMA), Business Secretary Kwasi Kwarteng expressed “widespread worry” about the rate of price increases and popular frustration that a gasoline duty drop announced earlier this year does not always appear to have been passed on.

Mr. Kwarteng has requested an urgent report by July 7th, as well as a longer-term research by the watchdog into how to boost market competition and increase price transparency for customers.

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The intervention comes as the average cost of filling a typical car with petrol surpassed £100 last week, adding to the cost of living pressures faced by households already grappling with rising electricity bills and food costs.

The invasion of Ukraine by Russia, a major oil producer, drove up the price of Brent crude to over $130 a barrel.

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Although the oil price has already fallen marginally, Mr. Kwarteng’s letter to the CMA expresses concern that forecourt prices “may not decline as much or as fast as they climb.”

To try to mitigate the damage, Chancellor Rishi Sunak slashed fuel duty by 5p per liter in March, and the business secretary wrote to petrol retailers last month to “remind them of their responsibility” to pass this on to consumers.

The CMA was “closely watching the issue,” Mr. Kwarteng said at the time.

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Meanwhile, motorists’ groups have urged the government to reduce fuel duty even lower or legislate a temporary reduction in fuel VAT.

Fuel price hikes are ‘very concerning’

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Mr. Kwarteng is requesting “the CMA’s guidance on the extent to which competition has resulted in the fuel duty cut being passed on to consumers, as well as the reasons for local differences in the price of road fuel” as part of this.

“The hikes in petrol costs in recent weeks will be immensely concerning for millions of drivers throughout the UK, so we appreciate the government’s concern about the appearance that the fuel duty drop is not being passed on to drivers,” CMA chief executive Andrea Coscelli said.

“The CMA stands ready to take action if competition is not working properly, or if evidence emerges of illegal anti-competitive collusion.

“We will engage with industry, motoring organizations and the government to ensure our advice to the business secretary is based on the facts.”

“Anyone with evidence of competition issues, collusion, or other illegal anti-competitive behavior, should get in touch with us.”

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The CMA can advise ministers, but it can’t force fuel merchants to submit data unless it conducts a formal market study, which can take up to a year to complete.

It can only penalize corporations or secure pledges to change their behavior if it deems that competition law has been broken after a formal investigation.

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