UK Watchdog Launches In-Depth Probe Into Soaring Refining Margins
July 08 2022 - 6:52AM
Dow Jones News
By Jaime Llinares Taboada
The U.K competition regulator said Thursday that it is concerned
about increasing refining margins driving up fuel prices and will
launch an in-depth market study into the issue, while adding that
the fuel retail market seems to be competitive.
The Competition and Markets Authority has published the results
of an urgent review requested by the U.K. government in light of
the increase in gasoline and diesel prices at gas stations. The CMA
found that the increase in global crude oil prices accounts for a
third of the year-on-year rise in road fuel prices, or 20 pence per
liter. The growing gap between the price of crude entering
refineries and the wholesale price of petrol and diesel leaving
them accounts for just over 40%, or 24 pence. The depreciation of
the sterling adds a further 12%, or 7 pence.
In addition, the CMA said the fuel retail market seems
competitive and retailer margins, or the gap between wholesale and
retail prices, haven't been a significant contributor to the
overall rise in pump prices.
As a result, the watchdog has launched a market study to examine
the road fuel market in more depth, with an update expected to be
published in the autumn. The regulator's General Counsel Sarah
Cardell said that the CMA needs to get to the bottom of whether
there are legitimate reasons for the increase in refining margins,
and also find out whether the disparities in retail prices between
urban and rural areas are justified.
Oil giant Shell PLC said Thursday in an update that refining
margins increased to $28 per barrel in the second quarter from $10
in the first quarter, which boosted the company's refining profits
by up to $1.2 billion in the period.
Write to Jaime Llinares Taboada at jaime.llinares@wsj.com;
@JaimeLlinaresT
(END) Dow Jones Newswires
July 08, 2022 06:37 ET (10:37 GMT)
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