Drivers are still paying too much for their fuel, with retail margins “significantly” above historic levels, according to the UK competition watchdog.

The Competition and Markets Authority (CMA) said that the fuel market is still “failing consumers” a year on from its first report that laid bare the problems in the sector.

It said that retailers’ fuel margins – the difference between what they pay for their fuel and the price they sell it at – are “still significantly above historic levels”.

Increases in fuel margins cost drivers more than £1.6 billion in 2023 alone, with supermarkets’ fuel margins now roughly double what they were in 2019, the CMA said.

The RAC motoring group said drivers feel “ripped off” by fuel retailers.

Simon Williams, head of policy at the RAC, said: “To see that drivers have paid £1.6 billion more than they should have in the last year is nothing short of outrageous, especially when so many are dependent on their vehicles.

“Drivers have every right to feel ripped off, especially knowing there is virtually no market competition between retailers.”

The CMA is now calling on the Government to use recent legislation to launch a compulsory scheme to ensure that fuel retailers share price information to allow motorists to compare forecourt deals.

The CMA launched a temporary price data-sharing scheme after its initial report found problems in the market, but said it is voluntary and only covers 40% of fuel retail sites across the UK.

Sarah Cardell, chief executive of the CMA, said: “Last year we found that competition in the road fuel market was failing consumers, and published proposals that would revitalise competition amongst fuel retailers.

“One year on and drivers are still paying too much.

“We want to work with Government to put in place our recommendation of a real-time fuel finder scheme to kick-start competition among retailers.

“This will put the power in the hands of drivers who can compare fuel prices wherever they are, sparking greater competition.”

The CMA said a smart data, real-time fuel finder scheme would allow motorists to save up to £4.50 each time they fill up and would make it easier to find cheaper forecourts.

It said: “The proposed introduction of the Digital Information and Smart Data Bill by the new Government could provide the legislative basis to set up a compulsory and comprehensive scheme… which the CMA would welcome.

“Legislation – which is needed to establish the scheme fully – may take time to come into force.

“So that motorists can start to benefit from quicker, easier access to fuel prices through everyday apps sooner, the CMA encourages the Government to introduce an enhanced interim voluntary scheme that is as close to the final scheme as possible.”

The British Retail Consortium said supermarkets look to offer value overall across food and fuel.

Its chief executive Helen Dickinson said: “Supermarkets remain focused on delivering the best overall value for their customers across all products that they sell, including food and petrol.

“Retailers will continue to work closely with the CMA and provide the necessary data to allow consumers to find the best prices for petrol and diesel.”