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Rural fuel more expensive, says watchdog 'Rocket and feather' fuel prices found by watchdog
(about 1 hour later)
People in rural areas in the UK are paying more for fuel compared to those in towns, adding to cost of living pressures, a competition watchdog has said. There is evidence that "rocket and feather" fuel pricing happened in 2022, a competition watchdog has said.
Fuel is on average 1.2p per litre more expensive in rural places, the Competition and Markets Authority said. This is when fuel prices rise as wholesale costs rise, but then fall more slowly than costs come down.
In addition, the CMA said it had found some evidence of "rocket and feather" pricing in 2022. There was evidence that retailers made more profit because of this, the Competition and Markets Authority (CMA) said.
This is when fuel prices rise quickly but fall slowly. The RAC said this was a widespread problem and Christmas fuel prices were more expensive than they should be.
The CMA found evidence of rocket and feather pricing across all retailers in March and April 2022, in particular for diesel prices, and some evidence that this drove greater profits, the watchdog said in a report.
It said it needed to investigate this more thoroughly to say with certainty whether this happened.
However, motoring organisation the RAC said there was "clear evidence of it happening this time last year and in 2018 and 2019".
"When wholesale prices trend down for weeks at a time drivers should see pump prices do the same at a similar rate - unfortunately our data shows that this is not often the case," said RAC fuel spokesman Simon Williams.
"What's happening now - as it was last December - is a massive downward shift in the price of wholesale fuel with a slow dropping of forecourt prices. Consequently, drivers are set for a more expensive time on the roads this Christmas than it should be," he added.
Wholesale diesel has "plummeted" 33p since the beginning of October, but pump prices have only fallen 8.4p, he said.
Meanwhile, the wholesale price of petrol has fallen from 130p a litre to 109p - a drop of 21p, he said. But the average price of unleaded petrol has only fallen 8p.
"We strongly urge the biggest retailers to lower their prices. Unfortunately, we fear they are holding out, hoping for a rise in the price of oil later this month," Mr Williams added.
The price of fuel has jumped due to factors including Russia's invasion of Ukraine, which has pushed up the price of diesel more, the CMA said. Most diesel in north-west Europe has historically come from Russia.
Refineries have been charging more for wholesale fuel relative to the cost of crude oil, and the pound has been weaker against the dollar, which has also pushed up prices.
Crude oil is priced in dollars, so a weaker pound makes it relatively more expensive to buy in the UK.
Rural premiumRural premium
Rural fuel prices are consistently higher than urban prices, the CMA said in a report. Meanwhile, people in rural areas, who tend to be much more reliant on cars, are paying more for petrol and diesel compared to those living in towns, adding to cost of living pressures, the CMA said.
The differences in fuel prices need further investigation, it said. Fuel is on average 1.2p per litre more expensive in rural places, it said.
"There are significant differences in price between many rural and urban areas," it said.
People living in rural areas tend to be much more reliant on cars than people living in towns.
They pay, on average, more for petrol and diesel than people living in urban areas.
Depending on where people buy fuel, there could be about a 4p per litre difference in cost between local petrol stations, in both towns and the countryside.
In general, the highest priced forecourts have fewer competitors, raising some competition concerns.
However, rural petrol stations face higher costs due to selling less fuel than urban forecourts and higher transportation costs.However, rural petrol stations face higher costs due to selling less fuel than urban forecourts and higher transportation costs.
Also, the higher prices may allow rural petrol stations to stay afloat in sparsely populated areas - if they closed, that would be a concern to local drivers, the CMA added.Also, the higher prices may allow rural petrol stations to stay afloat in sparsely populated areas - if they closed, that would be a concern to local drivers, the CMA added.
While rural prices are higher than urban prices, prices at motorway service stations are much higher than both. Depending on where people buy their fuel, there could be about a 4p per litre difference in cost between local petrol stations, in both towns and the countryside.
'Rocket and feather' In general, the highest priced forecourts have fewer competitors, raising some competition concerns.
The watchdog is also concerned about fuel prices rising rapidly when wholesale costs go up, but falling much more slowly than those costs when they go back down again.
It found evidence of this practice across all retailers in 2022, and in particular for diesel prices, and some evidence that this drove greater profits.
However, it said it needed to investigate this more thoroughly to say with certainty whether this happened.
The price of fuel has jumped due to factors including Russia's invasion of Ukraine, which has pushed up the price of diesel more. Most diesel in north-west Europe has historically come from Russia.
Refineries have been charging more for wholesale fuel relative to the cost of crude oil, and the pound has been weaker against the dollar, which has also pushed up prices.
Crude oil is priced in dollars, so a weaker pound makes it relatively more expensive to buy in the UK.