Millions of British drivers are being overcharged for fuel, paying significantly more at the pump than they should be, according to a damning new report from the Competition and Markets Authority (CMA). The watchdog has accused petrol stations of profiteering, revealing that profit margins have grown to 'historically high' levels while wholesale costs have fallen.
'Rocket and Feather' Pricing Leaves Drivers Out of Pocket
The CMA's investigation confirms a long-standing complaint from motorists and campaigners known as 'rocket and feather' pricing. This is where retailers are quick to hike pump prices when wholesale costs rise but notoriously slow to pass on savings when those costs drop. The AA highlighted a stark example: since late November, the wholesale cost of petrol fell by more than 7p per litre, which should have translated to a saving of around 8.4p per litre including VAT. Instead, the average pump price dropped by less than a penny.
Dan Turnbull, the CMA's senior director of markets, stated unequivocally: 'Fuel margins remain at persistently high levels - and our new analysis shows operating costs do not explain this. This indicates competition in the sector is weak - if it was working well, drivers could see lower prices at the pump.'
Supermarket and Forecourt Margins Under the Microscope
The regulator's deep dive into retailers' costs uncovered a worrying trend of expanding profits. It found that supermarkets' profit margins on fuel doubled between 2020 and 2024, and were on course to increase further in the first half of 2025, exceeding 6%. The situation is even more pronounced at other, non-supermarket forecourts.
For these operators, average margins mostly ranged between 8% and 10% from January 2023 to June 2025, but spiked to a high of 10.6% in March 2025. In monetary terms, non-supermarket margins averaged 11.1p per litre for 2025 to date, up from 10.8p in 2024. The CMA explicitly rejected claims from the fuel retailers' trade association that rising operating costs were to blame for these elevated margins.
Christmas Travel Hit by High Prices
The findings come at a critical time, as families across the UK fill up their tanks for long journeys over the Christmas break. The AA lamented that 'millions of drivers take to the road for Christmas and are being overcharged for their fuel.' Simon Williams, the RAC's head of policy, said many drivers would be sadly unsurprised by the CMA's conclusions, given the large price variations they see between different areas.
Hope on the Horizon? The Government's Fuel Finder Scheme
One key solution being championed by the CMA is a new government-led 'fuel finder' scheme, expected to launch early next year. This tool would allow drivers to check online and via apps to locate the cheapest forecourts in their area, thereby injecting much-needed competition into the market.
Both the AA and RAC have expressed hope that this scheme, combined with the CMA's ongoing scrutiny, will finally lead to fairer prices. However, they stress that currently, drivers are 'being taken for a ride at the pumps'. The report also notes that a change in pricing strategy by major supermarkets, notably Asda and to some extent Morrisons, has contributed to less aggressive competition in recent years.
The CMA's report, which builds on its earlier market study completed in July 2023, serves as a stark warning to the industry. While pump prices have reduced since that study, the underlying issue of inflated profit margins remains unresolved, costing UK motorists millions.
