The RAC is today urging the UK’s biggest fuel retailers to cut the price of petrol by at least 5p a litre to 150p to reflect their far lower wholesale costs.
As it stands the Government’s 5p duty cut brought in shortly after Russia’s invasion of Ukraine last year is not benefitting drivers struggling to cope with the cost-of-living crisis and, instead appears only to be helping retailers who have chosen to up their margins.
Despite oil trading around $90 a barrel and sterling only being worth $1.2, the delivered wholesale price of petrol averaged just over 113p last week which means, with the UK average price of unleaded standing at 155.33p, average retailer margin was more than 16p a litre before VAT is applied.
This is in stark contrast to the long-term average of 7p a litre and is even far higher the 10p margin that smaller, independent retailers argue is now fair due to inflation.
Even diesel, which is currently averaging 162p across the country, is overpriced by around 4p a litre. Last week a litre of wholesale diesel averaged 123p meaning average retailer margin is around 12p, compared to the 8p long-term figure tracked by the RAC since 2012.
The news of much higher-than-average margins revealed via the RAC’s analysis of wholesale and retail fuel prices is very concerning given the Competition and Markets Authority concluded its investigation in the summer and found that the big four supermarkets had overcharged drivers by 6p a litre in 2022, costing them around £900m. The RAC is worried recent history already appears to be repeating itself.
The report recommended retailers be required to provide real-time pump prices by site and that a price monitoring body be created – both of which the Government has pledged to legislate for.
In fact, after being strongly encouraged to publish prices by the former Energy Secretary ahead of it being mandated in law, many larger retailers started doing so. Unfortunately, there is not yet any news on when a pump price watchdog may be set up.
RAC fuel spokesman Simon Williams said, “Our analysis sadly shows that despite the Competition and Markets Authority’s investigation confirming drivers were being ripped off at the pumps – something we have been saying for years – and the Government acting on the findings, nothing has changed.
“Drivers are still losing out massively when wholesale prices come down. But in Northern Ireland where the supermarkets don’t dominate fuel retailing drivers are getting fairer deal with a litre of unleaded costing 150p and diesel 157p – 5p less than the UK average.
“Drivers and, indeed, the Treasury should be furious that the 5p-a-litre duty cut, which has been in place since the end of March 2022 is not being passed on at forecourts. There is no doubt from studying RAC Fuel Watch data that margins are up across the board, and while retailers argue their costs have increased due to inflation, the irony remains that there is a definite link between pump prices and consumer price inflation.
“A failure to cut pump prices to fairer levels when there is a clear opportunity to do so has the effect of keeping inflation artificially high – which is clearly in nobody’s interest.”