In the ever-evolving world of fuel prices, British motorists are faced with a bewildering array of costs at the pump, with variations that can seem both perplexing and frustrating. From one filling station to the next, even on the same road, the price difference can be as much as 5 pence per litre – a significant sum when filling up a typical 55-litre tank.
The reasons behind these disparities are multifaceted, rooted in the complex interplay of wholesale costs, retailer margins, and the dynamics of competition within the industry. According to the Automobile Association (AA), the wholesale price currently accounts for around 23% of the cost of a litre of petrol, with the remainder comprising fuel duty, VAT, and the operators’ costs and profit margins.
Crucially, the wholesale price is constantly in flux, influenced by factors such as the global oil price and exchange rates. This means that the price a retailer pays can vary depending on when they purchased their stock, leading to differences even between outlets of the same brand in neighbouring towns.
The role of supermarkets in the petrol market is also significant. These retailers, who control around a fifth of UK forecourts but sell 40% of the nation’s petrol and diesel, have been known to use fuel as a loss leader to drive footfall into their stores. This strategy, coupled with their ability to negotiate favourable wholesale deals due to their buying power, has allowed them to undercut traditional petrol station operators.
However, the Competition and Markets Authority (CMA) has observed that in recent years, supermarket fuel margins have been rising, from an average of 4% in 2017 to 8.4% in the first half of 2025. Meanwhile, non-supermarket retailers have seen their margins increase from 6.4% to 9.8% over the same period. This trend has been a source of concern, with the CMA warning that it could lead to higher prices for consumers if competition weakens.
To address this issue, the CMA has pushed for the introduction of a government-run price comparison tool, which will allow drivers to easily see the prices charged by filling stations in their local area. This initiative, set to launch this year, aims to empower consumers and encourage greater competition among retailers, potentially leading to more transparent and competitive pricing.
As the industry continues to evolve, motorists are encouraged to remain vigilant and “vote with their right foot,” driving to the most cost-effective filling station in their vicinity. With the right tools and information, British drivers can navigate the ever-changing landscape of petrol prices and ensure they are getting the best possible value for their money.
