The Government is consulting on a new scheme that will force fuel station operators to share real-time price information, paving the way for fairer fuel pricing.

The scheme could save drivers 3p per litre on fuel by helping them find the best deal at the pump

Under the proposals from the Department for Energy Security and Net Zero, fuel retailers would be required to share prices within 30 minutes of a change, passing the data to an organisation appointed by the Government.

This data would be available for use on platforms such as apps, online mapping platforms, journey planning tools, price comparison websites and in-car devices – helping drivers to search for the cheapest fuel while on-the-go.

According to the Government, the scheme could save drivers 3p per litre on fuel by helping them find the best deal at the pump. A similar state-wide scheme in Queensland, Australia, saw drivers save on average $93 (£48) per year, by making it easier for them to shop around for fuel.

But it could also help drive down average fuel prices nationally by forcing retailers to be transparent about how much they are charging and “reigniting competition”.

The proposals follow last year’s publication of the findings from the Competition and Markets Authority’s (CMA) long-awaited in-depth study into the road fuel market. This revealed some retailers had failed to pass on savings in oil prices – charging drivers 6p more per litre for fuel, which amounted to £900m in extra costs in 2022 alone.

Since then, 12 of the biggest retailers, including all four fuel-selling supermarkets, have signed up to an interim voluntary scheme run by the CMA to share their daily prices – with some websites using this data to offer price comparisons.

There are signs that fairer deals are returning to forecourts – fuel prices have fallen by an average of around 2p per litre every week between 13 November and 25 December, bringing petrol prices down to a level not seen since October 2021.

But the RAC highlighted at the start of January that the biggest fuel retailers were still overcharging drivers. And Energy Security Secretary Claire Coutinho – who previously warned that retailers charging rip-off prices would be held to account – said the new scheme would put “motorists back in the driving seat and bring much-needed competition back to the forecourts”.

At the end of 2023, the Government appointed the CMA as the body responsible for monitoring the road fuel market, to increase transparency and competition in fuel pricing. The watchdog will also shine a light on any attempt from retailers to overcharge drivers, advising government on any further action required to make competition work well.

The consultation launched today also covers some elements of the CMA’s new role in monitoring the road fuel market. Industry have been asked for their views on several areas, including the topics the CMA will focus on, the frequency of reporting, and support to help businesses with the CMA’s information requests.

RAC fuel spokesman Simon Williams said: “This is a really important day as it should pave the way for fairer fuel pricing for everyone who drives.

“Sadly, there have been far too many occasions where drivers have lost out at the pumps when wholesale prices have fallen significantly and those reductions haven’t been passed on quickly enough or fully enough by retailers.

“We badly need to see competition in the wider market match that of Northern Ireland where fuel prices are consistently 5p cheaper.”

The AA also commended the Government for tackling unfair pump prices.

Edmund King, AA president, said: “The brazen price disparity of sometimes 10p a litre or more between neighbouring towns had to end. Pumping up profits by hanging on to the savings from lower fuel costs while consumers, businesses and inflation were denied the relief was quite simply unforgivable.”

King added that the proposal would give leeway to fuel retailers to price according to their circumstances but keep competitive pressure on the trade by directing motoring consumers to where they can get their fuel at a better price.

Howard Cox, founder of the FairFuelUK campaign and secretary to the Fair Fuel APPG for motorists and hauliers, said years of lobbying the Government had paid off.

“I am delighted that a PumpWatch consumer pricing watchdog will roll out with teeth to protect UK’s millions of hard-pressed drivers from perennial profiteering by the fuel supply chain at the pumps. I want to put on record my thanks to Minister Claire Coutinho for listening, acting and ensuring there is nowhere to hide for those fuel supply chain bandits.”

The consultation on the PumpWatch scheme closes at 11:59pm on 12 March 2024.