On Saturday, Kwasi Kwarteng, Secretary of State for Business, Energy and Industrial Strategy wrote to the Competition and Markets Authority (CMA) requesting that it
“conduct an urgent review of competition in the fuel market, and to provide advice to the UK Government on steps that might be taken to improve outcomes for consumers across the UK.”
Guido can save Kwasi and the CMA a lot of effort. No inquiry is needed. Government taxes account for more than ten times* as much of the cost of fuel than retailer margins. If you want to improve outcomes for consumers, cut fuel taxes.
Andy Mayer, Energy wonk at the Institute of Economic Affairs, predicts:
“The inquiry will also find nothing new. There are over 8,000 fuel stations in Britain. It is self-evidently a competitive market, and could be more so by removing restrictions to competition, like motorway service licensing. The answer to high prices today is lower fuel duty. The answer to local differences is to build a rival, not more regulation. And the answer to lower long-term prices is more domestic production, not windfall taxes, banning onshore drilling, and dependency on imports.”
The failure to frack, along with high fossil fuel extraction taxes, add further hidden costs to wholesale barrel prices, which are then passed on to consumers at the pump. All due to the government…
*Retail fuel profits account for between the 2-4% (RAC) of each tank. Whereas, 45%-46% are taxes and 7-10% from the biofuel mandate.