Drivers have been the victim of “rocket and feather” pricing by fuel retailers this year, the competition watchdog has found.
The Competition and Markets Authority (CMA) said diesel has been particularly affected by the behaviour, in which pump prices quickly reflect rising wholesale costs but are slow to fall when costs drop.
This could be driven by the extreme volatility of prices and supply in 2022″, according to the CMA.
In the update on its road fuel market study, the CMA described 2022 as “the most volatile” for fuel prices since reliable records began.
Prices rose by around 50p a litre from January to July – the largest leap recorded within a year – before falling by 31p for petrol and 14p for diesel.
The CMA also stated that the difference between the price retailers paid for fuel and the pump price rose from 2017 to last year by between three and four pence per litre for petrol and between two and three pence per litre for diesel.
This could be due to “other cost rises for retailers or weaker competition on fuel”, it said.
The watchdog found that the gap between diesel and petrol prices has become “larger than ever reliably recorded”.
Diesel now costs around 24p more per litre than petrol.
The watchdog’s interim chief executive Sarah Cardell said: “It has been a terrible year for drivers, with filling up a vehicle now a moment of dread for many.
“The disruption of imports from Russia means that diesel drivers, in particular, are paying a substantial premium because of the invasion of Ukraine.
“A weaker pound is contributing to higher prices across the board too.
“There are no easy answers to this.”
Ms Cardell added that the CMA is considering whether a “lack of effective competition” within the UK is “making things worse” for drivers.
“Volatility has unquestionably been an issue in fuel pricing since Russia invaded Ukraine, but 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.
“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.”
AA fuel price spokesman Luke Bosdet said: “The huge surges in pump prices have been one of the biggest contributors to inflation that has hammered UK consumers.
“One of the chief concerns has been how quickly the fuel retailers have responded to wholesale price volatility, both up and down.
“The drivers’ view is that pump prices shoot up much more quickly than they come down in response to wholesale cost changes.”