The RAC has on Tuesday urged 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.
The motoring organisation said 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, the RAC noted, adding that 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.
“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,” Simon Williams, RAC fuel spokesman said.
“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.
The Competition and Markets Authority investigation, concluded in the summer, found that the big four supermarkets had overcharged drivers by 6p a litre in 2022, costing them around £900m.
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.
“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,” Williams said.
“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.”
“We badly need the government to set up the price monitoring body recommended by the CMA and for it to carry powers to take action against big retailers that don’t reflect downward movements in the wholesale market such as we’ve been experiencing in the last six weeks.”
Responding to the RAC’s call for major retailers to cut petrol by 5p per litre, Gordon Balmer, executive director of the Petrol Retailers Association, said: “Independent retailers continue to price competitively in a dynamic market, striving to offer fair and competitive prices to consumers, fully recognising the importance of delivering value, especially in the face of today’s challenges.”
The PRA has offered its full support and cooperation to the CMA as it develops its fuel price transparency scheme to create a pricing environment that is more transparent and consumer-friendly.
“Our members are small businesses that have worked hard to keep their communities fuelled and fed during unprecedented times. Many independent forecourts actively undercut supermarkets, showcasing the dynamic nature of the market,” Balmer added.
“In the face of ongoing market volatility, our retailers are dedicated to ensuring their customers receive the best deals possible. I encourage motorists to make use of all the resources available to find the best deals possible.”