How supermarkets are getting away with overcharging you at the fuel pumps

The government has told supermarket bosses 'enough is enough' on their inflated fuel prices. But what will actually change - and when?

An electronic display board shows the prince in pence per litre for petrol and diesel at a Tesco supermarket store in York, northern England on March 30, 2020, as life in Britain continues during the nationwide lockdown to combat the novel coronavirus pandemic. - Oil prices plunged Monday as the number of novel coronavirus cases worldwide surged past 700,000, reinforcing worries about the impact on the global economy. Crude oil struck the lowest levels in more than 17 years on Monday, with Brent North Sea tumbling to $22.58 per barrel at one point. (Photo by Oli SCARFF / AFP) (Photo by OLI SCARFF/AFP via Getty Images)
Fuel prices have dropped in recent months but still remain higher than they were before the pandemic. (Getty Images)

The cost of filling up your car at the petrol pump isn’t falling despite the wholesale price of fuel dropping, meaning retailers including the UK’s biggest supermarkets are cashing in on motorists during the cost of living crisis.

Energy secretary Grant Shapps this week demanded that supermarket and petrol bosses meet him to explain what’s going on. But will that mean it’s finally a little less expensive to run your car? We found out.

Why are supermarkets being singled out over the cost of filling up? Fuel prices have dropped in recent months but still remain higher than they were before the pandemic. Experts wanted to find out why – and they discovered that the country’s biggest supermarkets appear to be keeping prices artificially high, even though fuel now costs them less to buy on the wholesale markets.

So why aren’t motorists going somewhere else? During the pandemic, when people were urged to only make one trip to the shops per week or less, high street supermarkets took advantage of the lack of competition to boost their petrol prices. Even though we’re no longer in lockdown, people often still rely on the big supermarkets for fuel, and these big businesses are profiting from it.

Hasn’t anyone noticed? Yes, last year the Competition and Markets Authority (CMA) carried out an investigation into fuel prices and found clear evidence that drivers are being asked to pay more. It revealed that Morrisons was doubling its margins on fuel for 2023, Asda’s margins had tripled since 2019 and both Tesco and Sainsbury’s had followed their behaviour and raised their prices too.

How petrol prices have increased over the years. (RAC)
How petrol prices have increased over the years. (RAC)

How much is this costing us? A litre of petrol now costs drivers 6p extra on average. That all adds up. Andrew Bailey, the governor of the Bank of England, said fuel prices would have to be tackled to beat rising inflation.

Surely the government can get involved? They have. Energy secretary Shapps called supermarkets to an emergency meeting this week to thrash out a solution to the problem, warning they were using motorists as “cash cows”. He called in executives from Asda, Tesco, Morrisons and Sainsbury’s as well as BP, Shell and Esso, and demanded to know why they weren’t passing their savings on to consumers. He had previously talked about passing a new law forcing supermarkets to regularly share live price data so that it can be compared by consumers using a live app.

That’s great! When will the law be passed? Hang on, don’t get too excited. The plans for new legislation already appear to have been scrapped.

Huh? The crunch meeting between government and fuel bosses didn’t seem to go their way, with Shapps stating afterwards that he backed a voluntary data price sharing scheme rather than promising a law to require them to do so. But he added, “I’m warning those who fail to put words into actions and continue to rip off motorists: you will be held to account.”

I'm not convinced. What’s the solution? According to the experts, it’s the one thing that the government hasn’t managed to achieve. Simon Williams, a spokesperson for the AA told Yahoo News that wholesale price monitoring of retail petrol price was “badly needed”.

Is that likely to happen? After Shapps’ failure to compel supermarkets to act, there’s little sign it will. In a full statement, the AA warned a voluntary scheme would not give the supermarkets enough incentive to push prices down in an effort to fight for customers. “Without the threat of consequence in the form of fines, the biggest retailers are unlikely to lower their pump prices quickly enough when the wholesale market trends down. This aspect of the CMA’s report needs to be properly addressed when legislation is put before parliament,” it said.