Petrol retailers vindicated after Reeves ‘profiteering’ claims

Petrol retailers have been vindicated of “price gouging”, pouring cold water on the government’s accusations of profiteering from the war in Iran.

The Competition and Markets Authority (CMA) found that higher fuel prices in the UK were caused by the rising cost of oil, rather than by retailers expanding their margins to profit from the disruption caused by the Iran war.

A bitter row erupted between forecourt operators and the government after ministers said they would “not tolerate” so-called “price gouging”.

Chancellor Rachel Reeves and energy secretary Ed Miliband met with petrol retailers to crackdown on fears that the price of petrol was being inflated to line bosses’ pockets. 

“I will not tolerate any company exploiting the current situation to make excess profits at consumers’ expense. I’m backing drivers and families — and I expect a fair deal at the pump,” Reeves had said. 

The comments were met with a furious rebuttal by the Petrol Retailers’ Association, who accused Reeves of “inflammatory” language which they linked to incidents of violence against forecourt staff.

Majority of retailers ‘acted responsibly’

Delivering the results of an investigation commissioned by Reeves, the CMA said on Friday that the difference between the price petrol retailers are paying for fuel and the price at which they are selling it is “broadly unchanged” since the Iran war began.

The watchdog said it had noticed some wider margins for a “minority of retailers,” which it said it intended to pursue.

Sarah Cardell, chief executive at the CMA, said: “The conflict in the Middle East has driven sharp increases in road fuel prices, putting real pressure on households and businesses across the UK.

“That’s why we’ve stepped up our monitoring. This scrutiny is working: on average, retailer fuel margins did not increase.”

Martin McCluskey, minister for energy consumers, said the report showed most retailers have “avoided boosting their margins and acted responsibly”. 

“However, there are some that haven’t. We fully support the CMA in asking questions of those and, alongside them, will hold them to account,” he said.

Surging oil is economic blow

It comes after the price of oil spiked above $126 earlier this week, following reports Donald Trump was being briefed on fresh military action in Iran. Whilst they have since slipped back a touch, Brent crude – the international benchmark for oil – remains up nearly 90 per cent for the year-to-date.

Much of the relentless rise in oil prices have come from traffic through the Strait of Hormuz being all-but-halted since the war broke out in late February.

The narrow waterway, which sits between Iran to the North and the UAE to the south, sees around a fifth of the world’s oil supply flow through.

The Bank of England gave a major warning on Thursday on the inflationary impact triggered by soaring oil prices.

The spike in prices have triggered a global energy shock, which have quickly fanned the flames of inflation.

In a medium-risk scenario where oil and gas prices cause inflation to rise for the next two years, the Bank warned interest rates could be hiked to 4.25 per cent.

Many of the members of the Monetary Policy Committee – who held rates at 3.75 per cent this week – expect inflation only to fall back to the target of two per cent until 2028.