The United States Department of Energy has launched an investigation into potential price gouging at petrol stations, a move that echoes President Biden's earlier calls for the oil industry to pass on falling crude prices to consumers. The probe will examine whether retail fuel prices have fallen in line with the drop in wholesale costs, a question that has also been raised in the UK but with markedly different conclusions.
According to data from the RAC, the average price of a litre of unleaded petrol in the UK has fallen from a peak of 191.5p in July to 167.5p in early September, a decline of 12.5%. Over the same period, Brent crude has dropped from $123 per barrel to just under $100, a fall of 18.7%. While the divergence suggests margins have widened, the Competition and Markets Authority (CMA) has repeatedly found that the UK retail fuel market is competitive, with price fluctuations driven by a complex mix of global supply, local competition, and exchange rate movements.
The US investigation, however, takes a more interventionist approach. The Federal Trade Commission (FTC) has been asked to gather data on price changes at the pump versus changes in the cost of imported oil. If evidence of collusion or unfair pricing emerges, the Biden administration could threaten legal action or even impose a windfall tax on oil companies, a policy the UK government has so far resisted.
Critics of the US probe argue it is politically motivated, timed to distract from inflation running at 8.3% and the midterm elections. In the UK, the Treasury has signalled it prefers market forces to solve the problem, pointing to the 5p temporary cut in fuel duty as a sufficient measure. But with household budgets squeezed, the pressure is mounting on Chancellor Jeremy Hunt to go further.
For investors, the transatlantic divergence in regulatory sentiment matters. British energy stocks, including BP and Shell, have outperformed their US counterparts this year, partly due to the UK's lighter touch. However, the risk of a UK windfall tax remains real if the energy price crisis deepens. Watch for the CMA's next update on fuel margins, due in October, for clues.
The bottom line: the US probe is a reminder that energy markets are never just about supply and demand. Politics, fiscal ideology, and public anger all play a part. For now, the UK retains its reputation for competitive pricing, but as any fund manager knows, reputations can change faster than the flow from a petrol pump.
