In March, the Government under ex-Prime Minister Keir Starmer commissioned the Competition and Markets Authority, the UK’s chief market regulator, to monitor the fuel sector for any evidence of price gouging. While the CMA is yet to find any evidence of retailers changing their pricing tactics to profiteer from the high oil prices, the regulator has pointed out that a lack of competition in the sector has led to “passive” pricing strategies. These keep prices high for consumers, because retailers are sluggish to react to fluctuations in the price of oil, instead waiting for others to do so first.
“The UK might have limited leverage when it comes to ending the US/Iran war and ultimately bringing oil prices down, but the Government could take steps to ease the burden on drivers by lowering fuel duty further or reducing VAT,” Williams said.
As of the time of writing, the Government is set to reverse the temporary five pence cut to fuel duty in the Spring – something that was pushed back from September in light of the high fuel prices caused by the war in Iran. As for whether this reversal will still take place next year or whether any other relief will be granted; Chancellor John Healey told the BBC’s Newscast podcast that “as far as diesel prices go, I’m acutely conscious of how hard this is hitting people… and I will be able to make more commitments [and] set out more detail of any moves that we’re able to make to ease the cost of living at the [Autumn] Budget.”
Relief cannot come soon enough, though, given that the US Energy Information Administration (EIA) suggests that due to gradually dwindling oil reserves, the price of fuel – particularly diesel – could continue to soar well into 2027.
A HM Treasury spokesperson told Auto Express: “Since the outset of the war in Iran this government continues to protect the British people and businesses from this crisis.”
“This means drivers benefit from the extension of the five pence fuel duty cut, with diesel 11 pence per litre cheaper until the end of the year than it would have been compared to plans inherited from the previous government.”