Petrol retailers accused of not passing drop in oil prices to drivers

Pressure is mounting on petrol station owners to slash fuel prices after UK’s motoring group accused retailers, including the largest supermarkets, of not cutting prices quickly or significantly enough compared with the falls in wholesale costs. 

While December saw the average price of fuel fall by 9p a litre saving drivers £5 a tank, the RAC believes drivers should have seen much bigger drops due to far lower wholesale costs, RAC stated today (6).

The average price of petrol in the UK fell by 8p a litre in December to 151p and diesel by 9p to 174p, according to the RAC. However, the RAC argues that petrol should be sold at 140p a litre rather than 151p, and diesel at 160p, not 174p.

RAC Fuel Watch data showed that filling a full 55-litre tank of petrol cost £83.08 on average at the end of December, £4.63 cheaper than at the beginning of the month. For diesel it was £95.68, £5.19 cheaper. 

Oil prices have fallen in recent months amid concerns over the impact of a potential global recession and the economic effects of Covid in China. 

The Competition and Markets Authority was asked by the UK government to examine fuel prices last summer after accusations that a cut to fuel duty had not been passed on to consumers. The authority stated that there was evidence of “rocket and feather” behaviour – when prices shoot up rapidly but come down slowly – in the industry. The investigation is still on. 

In late December, the business secretary, Grant Shapps, wrote to fuel retailers urging them to “explain changes in pricing behaviour” to the CMA, voicing concerns over pressure on consumer spending.  

“This government will not hesitate to act to ensure competition is healthy and consumers get a fair deal on their fuel,” he said. 

RAC fuel spokesperson Simon Williams said that for weeks, big four supermarkets are being called on to cut their prices more substantially to give drivers a fairer deal when they fill up. 

“On the face of it, December looks like it was a good month for drivers with 9p coming off at the pumps on top of November’s 6p, but there’s no question that the drop should have been far bigger given how far wholesale prices have come down.

“Even though they have reduced their prices collectively by more than 10p a litre in December, they are still nowhere near where they should be given the scale of the drop in wholesale prices.” 

“Looking at prices in Northern Ireland is a good reference for what should be happening across the rest of the UK as petrol was 4.5p cheaper there than the UK average at the start of December but was nearly 7p lower at the end of the month at just 144.43p.

“If fuel can be sold this cheaply in Northern Ireland, then this must mean something is very wrong with fuel retailing in mainland UK.”