The Energy Secretary Claire Coutinho has called on fuel retailers to be more transparent with their customers over pricing.
The Department for Energy Security and Net Zero (DESNZ) that the Competition and Markets Authority (CMA) will be provided with more powers to monitor pump prices.
The CMA will be given permission to report “any sign of malpractice to the Government” which is aimed at improving the competition.
The DESNZ said that fuel retailers will be told “come clean on how much they are charging customers on their forecourts versus their profits.”
Fuel retailers who fail to comply could be fined by the CMA of up to 1% of their worldwide turnover and even an ongoing fine of 5% of their daily turnover.
Coutinho said: “At a time when many were struggling with increased living costs, we saw shocking behaviour from some fuel retailers who failed to pass on savings at the pump.
“Now we are cracking down on any petrol station bosses found to be unfairly hiking up their prices.
“That’s why we’re giving the CMA new powers to bring fairness back to the forecourts and make sure UK drivers get a competitive fuel price.”
Steve Gooding, director of motoring research charity the RAC Foundation, said: “This is good news for drivers and, though it might not immediately seem like it, retailers too.
“With persistently high pump prices over the past couple of years, greater transparency about pricing and a keener eye on profit margins should end some of the suspicion that has grown up between fuel companies and the 30 million-plus motorists – not to mention businesses – who rely on their products.”