Regan Brown
Fuel sales in the UK are dominated by supermarkets, despite them operating only a fifth of the country's forecourts. In 2022, HM Revenue and Customs data showed that 45.3 billion litres of fuel were used by drivers, with 27.7 billion litres of diesel and 14.8 billion litres of petrol. In 2023, sites belonging to supermarket chain Sainsbury's sold the highest volume of petrol per station, at 11,828 kilolitres per annum. During the COVID-19 pandemic in 2020, supermarkets sold nearly 35% of all fuel in the UK, with diesel shares at around 29%. In October 2023, an average of approximately £771.4 million worth of fuel was sold weekly in the UK.
| Characteristics | Values |
|---|---|
| Number of filling stations | 8,300 |
| Number of filling stations in 1970 | 37,000 |
| Volume of petrol sold daily | 46 million litres |
| Volume of diesel sold daily | 74 million litres |
| Volume of fuel used by drivers in 2022 | 45.3 billion litres |
| Volume of diesel used by drivers in 2022 | 27.7 billion litres |
| Volume of petrol used by drivers in 2022 | 14.8 billion litres |
| Average weekly retail sales of automotive fuel in October 2023 | £771.4 million |
| Fuel duty rate in 2022 | 52.95p per litre |
| Fuel duty rate in recent years | 57.95p per litre |
| Fuel duty revenue in 2024 | Over £26 billion |
| VAT on fuel | 20% |
| Supermarket market share of fuel sales in 2020 | 35% |
| Diesel market share of supermarket fuel sales in 2020 | 29% |
| Petrol station with the highest volume of fuel sold per site in 2023 | Sainsbury's |
| Petrol station with the highest market share of motor fuel sold in 2023 | Tesco |
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What You'll Learn
Fuel sales by retailer type: supermarkets vs independent retailers
The retail fuel market in the UK is dominated by supermarkets, despite them operating only around a fifth of the forecourts. Conversely, independent retailers operate around two-thirds of the country's filling stations but are only responsible for just over a third of all fuel sold. This is because supermarkets are able to offer cheaper prices, and are keen to compete on price, which makes them a popular choice for many UK drivers.
According to the UK Petroleum Industry Association (UKPIA), there are around 8,300 filling stations in the UK. Of these, supermarkets operate around 16% to 20% of forecourts, while independent retailers operate the remaining two-thirds. Despite this, supermarkets are responsible for around 44% to 50% of total fuel sales. For example, in 2020, 49.2% of petrol sales were made via supermarket forecourts.
Supermarkets such as Tesco and Asda are the most popular choices for fuel among UK drivers. Tesco has the highest market share of the supermarkets, at 6.1%, while Shell, a British multinational oil and gas company, owns 13.9% of service outlets in the country.
The presence of supermarkets selling fuel can have a significant impact on local prices, particularly in rural areas. If local supermarkets do not compete strongly on price, motorists may end up paying more. The government has previously taken action to help some of the country's most rural communities, where fuel prices were deemed to be negatively affecting residents. In 2012, it introduced a 5p rural fuel duty discount in the Inner and Outer Hebrides, the Northern Isles, and the Isles of Scilly.
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How fuel prices are determined
The price of fuel in the UK is influenced by a multitude of factors. Firstly, the global price of crude oil is a significant determinant, as oil is traded in US dollars, and the exchange rate between the dollar and sterling can impact pump prices. For instance, a combination of high oil prices and a weak pound can lead to higher prices at the pump.
Secondly, fuel duty and VAT tax constitute a large portion of fuel costs in the UK. The government levies a fuel duty of 52.95 pence per litre (as of 2024), which is included in the pump price. VAT is added at 20% on top of the total cost, including fuel price and duty. The proportion of tax paid to the Treasury depends on the pump price; for instance, at £1 per litre, 75 pence goes to the Treasury.
Thirdly, refining and distribution costs play a role in pricing. Refining crude oil into petrol and diesel, as well as transporting it to petrol stations, incurs expenses that are factored into the price per litre. These costs can fluctuate based on refining capacity and demand levels, with diesel typically costing more than petrol due to its more complex refining process and higher demand in Europe.
Local dynamics also influence pricing. The presence of supermarkets with their own forecourts can drive competition and affect prices in a given area. Motorway fuel stations, for instance, often charge more due to a lack of nearby competitors. Additionally, independent retailers may be determined to offer the cheapest fuel, impacting local prices. Rural locations may experience higher prices due to increased distances from fuel terminals.
Lastly, the balance between supply and demand directly impacts fuel prices. Seasonal patterns, such as increased summer travel, can lead to higher prices during certain times of the year. Extreme weather, war, natural disasters, and legislative changes can also affect supply and demand dynamics, influencing fuel prices.
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Fuel tax and duties
Fuel duty is charged by the UK government on every litre of fuel sold, be it petrol or diesel. It is included in the pump price. In recent years, the fuel duty has been frozen at 57.95 pence per litre. In 2022, following the Russian invasion of Ukraine, which caused fuel prices to soar, the duty rate was cut to 52.95 pence. This rate was confirmed to remain in place from Spring 2025.
The government uses its annual budget to set the rate of fuel duty. It is a general form of taxation, and the revenue raised is not used specifically for roads or anything related to motoring. According to the Office for Budget Responsibility, fuel duties are a "significant source of revenue for the government", estimated to raise £26.2 billion in 2022/23.
The total retail price paid at the pump includes a significant amount of tax. As of September 2024, the fuel duty is set at 52.95 pence per litre, with VAT at 20%. The total proportion of tax paid to the treasury depends on the pump price. For instance, with fuel at 120 pence per litre, 65% of the cost is tax. This rises to 75% when the fuel costs £1 per litre, meaning 75 pence of every litre sold goes to the treasury.
The Office for Budget Responsibility estimates that the cumulative cost of freezing fuel duty rates between 2010/11 and 2021/22, relative to increasing them in line with inflation, is around £65 billion. In March 2022, the Chancellor, Rishi Sunak, announced a temporary tax cut of 5 pence per litre for 12 months, forecast to cost £2.4 billion in 2022/23. Based on announced policies, receipts are expected to increase by £2.6 billion to £27 billion in 2026/27 due to the reversal of the 5-pence cut and RPI uprating of the duty rate.
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Fuel sales by brand
The UK fuel retail industry is undergoing significant changes, with a notable decline in the number of forecourts. Despite this, supermarkets dominate fuel sales, accounting for around 44% of total fuel sales in the UK, even though they operate only about 16% of forecourts.
Tesco leads the motor fuel market in the United Kingdom. In 2023, Tesco had the largest market share of motor fuel sold in petrol stations at nearly 16%, despite selling less fuel per site than other supermarkets. Tesco's market share is the highest out of the supermarkets, at 6.1%. Sainsbury's, Morrison's, and Asda follow Tesco in terms of the volume of petrol sold per station.
Shell, the British multinational oil and gas company, owns the second-largest market share of motor fuel sold at 14.3%. This is due to Shell having the greatest number of petrol station sites in the country, with 1,123 sites in the UK as of 2022.
It is important to note that the brand displayed at a forecourt may not be the retailer in charge of prices. For example, BP's fuel is sold by various retailers and not just BP itself.
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Fuel sales volume and value
Fuel sales in the UK are dominated by supermarkets, which operate around a fifth of the country's forecourts. In 2023, Tesco had the largest market share of motor fuel sold in petrol stations at nearly 16%, followed by Shell with 14.3%. Shell has the second-largest market share because it owns one of the greatest numbers of petrol station sites in the UK. Sainsbury's sold the highest volume of petrol per station in 2023, at 11,828 kiloliters per annum.
According to the UK Petroleum Industry Association (UKPIA), there are around 8,300 filling stations in the UK, a drastic reduction from the over 37,000 stations in 1970. Despite operating only about a fifth of the forecourts, supermarkets account for over a third of all fuel sold. In contrast, independents operate around two-thirds of the filling stations but are responsible for just over a third of fuel sales. The remainder is accounted for by sites owned by oil companies such as Shell, BP, Esso, Texaco, and TotalEnergies.
In 2022, it was reported that Shell had 1,123 sites in the UK and operated 526 of them, with the remaining 597 run independently. According to HM Revenue and Customs data for that year, UK drivers used 45.3 billion litres of fuel, including 27.7 billion litres of diesel and 14.8 billion litres of petrol. This equates to 46 million litres of petrol and 74 million litres of diesel sold daily in the UK.
The pump price of fuel in the UK includes fuel duty, which is charged by the government on every litre of fuel sold, regardless of type. In recent years, the fuel duty has been frozen at 57.95 pence per litre. In 2022, following the Russian invasion of Ukraine, which caused fuel prices to surge, the duty rate was cut to 52.95 pence. As of September 2024, the fuel duty remains at 52.95 pence per litre, with VAT at 20%. The proportion of tax paid to the Treasury depends on the pump price. For instance, at £1.20 per litre, 65% of the cost is tax, but this rises to 75% at £1 per litre.
The latest data from October 2023 shows that an average of approximately £771.4 million worth of fuel was sold weekly in the UK.
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Frequently asked questions
According to the UK Petroleum Industry Association (UKPIA), around 46 million litres of petrol and 74 million litres of diesel are sold in the UK daily. This amounts to 27.7 billion litres of diesel and 14.8 billion litres of petrol per year.
Fuel duty is charged by the government on every litre of fuel sold, whether petrol or diesel. As of September 2024, the fuel duty is set at 52.95 pence per litre and VAT at 20%. The amount of tax paid to the treasury depends on the pump price. For instance, at 120 pence per litre, 65% of the cost is tax, while at 100 pence per litre, 75% is tax.
Supermarkets dominate fuel sales in the UK, despite only operating around a fifth of the forecourts. In 2023, Tesco had the largest market share of motor fuel sold in petrol stations at nearly 16%. Shell had the second-largest market share at 14.3%, with Sainsbury's, Morrison's, and Asda following.
Fuel duty raises more than £26 billion a year for the government.
