RAC calls for petrol retailers to cut price by 5p a litre

The biggest fuel retailers should cut the price of petrol by at least 5p a litre to 150p to reflect their far lower wholesale costs, according to the RAC.

The motoring organisation also said that drivers are not seeing the benefit of the UK government’s 5p duty cut brought in after Russia’s invasion of Ukraine last year.

Oil prices soared following the invasion, but currently stand at around $90 a barrel compared with last summer’s peak of more than $120 a barrel.

RAC data shows that the delivered wholesale price of petrol averaged just over 113p last week. With the UK average price of unleaded standing at 155.33p, it means that the average retailer margin was more than 16p a litre before VAT is applied. This is considerably higher than the long-term average of 7p a litre and is even far higher the 10p margin that smaller, independent retailers say is now fair due to inflation.

Diesel, which currently averages 162p across the country, is also overpriced by around 4p a litre, the RAC said. Last week a litre of wholesale diesel averaged 123p, making the average retailer margin around 12p, compared to the 8p long-term figure tracked by the RAC since 2012.

“Drivers are still losing out massively when wholesale prices come down,” said RAC fuel spokesman Simon Williams. “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.”

Williams added that with margins up across the board, the Treasury should be “furious” that the 5p-a-litre duty cut is not being passed on at forecourts.

Fuel prices jumped in August

The price of petrol at forecourts across the UK increased by nearly 7p (6.68p) per litre in August, while diesel went up by 8p, RAC data shows.

This represents the fifth and sixth biggest monthly rises in 23 years, the motoring organisation said.

At the end of the month, the average price of unleaded petrol stood at 152.25p — up from 145.57p at the beginning of the month, adding nearly £4 on average to the cost of filling a tank (£80 to £83.74). Diesel rose from 146.36p to 154.37p, making a fill-up nearly £4.50 (£4.41) more expensive.

Higher oil prices are behind the increase in fuel costs, with a barrel of oil up $12 since the start of July to nearly $87 ($86.86), after producer group OPEC+ reduced supply. This, in turn, increased the wholesale cost of fuel paid by retailers.

However, RAC fuel spokesman Simon Williams said that drivers would have paid even higher prices if the biggest retailers had not chosen to reduce their margins to more normal levels as wholesale fuel costs went up.

“Wholesale costs for both petrol and diesel started to rise in late July on the back of oil hitting $85,” Williams explained. “While the barrel price has stayed at that level throughout August, retailers had no choice but to pass on their increased costs at the pumps. Fortunately for drivers though, they have clearly been influenced by the Competition and Markets Authority’s investigation as, all of a sudden, margins are once again closer to their longer-term averages. It appears they used the wholesale price rise to subtly cover their tracks — after all, big reductions at the pumps soon after the CMA’s findings were announced would perhaps have been far too obvious a step.

“All we can hope is that this move by many big retailers back to fairer forecourt pricing remains when wholesale costs go down again.”

Drivers paid higher fuel prices due to weak competition, CMA finds

Motorists paid an extra 6p per litre for fuel at supermarkets last year because of weaker competition, according to a report by the competition watchdog.

In a year-long investigation into the road fuel market in the UK, the Competition and Markets Authority (CMA) examined whether there was any “failure in competition” which resulted in higher pump prices for petrol and diesel.

It found that increased supermarket fuel margins led to drivers paying an extra 6p per litre.

While supermarkets are usually the cheapest places to buy fuel, the CMA found that Asda’s targeted fuel margins for 2023 were more than three times what they had been for 2019, while Morrisons’ target doubled in the same period. Sainsbury’s and Tesco raised their prices in line with these changes, indicating that “competition has weakened”, the CMA said.

Asda was issued with two £30,000 fines for sending a representative to attend a mandatory interview who was not able to provide evidence on topics they had advance notice of, and for failing to respond completely to a compulsory request for information.

“Competition at the pump is not working as well as it should be and something needs to change swiftly to address this,” said Sarah Cardell, chief executive of the CMA. “Drivers buying fuel at supermarkets in 2022 have paid around 6p per litre more than they would have done otherwise, due to the four major supermarkets increasing their margins. This will have had a greater impact on vulnerable people, particularly those in areas with less choice of fuel stations.”

To help “reignite competition” among fuel retailers, it needs to be easier for drivers to compare up-to-date prices so retailers have to compete harder for their business, Cardell added.

The regulator recommended a ‘fuel finder scheme’ to help drivers find the cheapest prices online. Giving drivers access to live, station-by-station fuel prices on their phones or satnavs, it would be made possible by new compulsory open data requirements and backed by a new ‘fuel monitor’ oversight body.

The RAC said that drivers appeared to have lost nearly £1bn as a result of increased retailer margins on fuel.

“It’s all about action now and we very much hope the government follows through with both of the CMA’s recommendations,” said RAC fuel spokesman Simon Williams. “While forcing retailers to publish pump prices is a positive step for drivers, what’s of far more significance is the creation of a fuel monitor function within government which, we very much hope, actively monitors wholesale prices to ensure forecourts don’t overcharge when the cost they pay to buy fuel drops.”

‘Shocking’ price disparity between petrol and diesel

Motorists in the UK are paying too much for diesel, the RAC says.

The wholesale price of diesel is now on a par with petrol — yet diesel is still being sold for 17.5p per litre more on average at forecourts across the UK.

Data from RAC Fuel Watch shows that the average price of petrol currently stands at 146.63p per litre while diesel is 164.26p, despite both fuels selling for around 114.5p on the wholesale market. In fact, on two days last week wholesale diesel was cheaper than petrol.

“The forecourt price disparity between petrol and diesel across the UK is absolutely shocking given their wholesale prices are now virtually identical,” said RAC fuel spokesman Simon Williams.

“At the beginning of March wholesale diesel was only 6p more expensive than petrol yet there was a 20p a litre gap between both fuels on the forecourt. Now the two fuels are identical on the wholesale market, and there’s still more than 17p difference at the pump.

“For retailers to be taking a margin of nearly 20p a litre on average throughout March, compared to the long-term average of 7p, is devastating for every driver and business that relies on diesel.”

Williams noted that the price of a litre of diesel should have already come down to around 152p, and now the wholesale price is the same as petrol it ought to filter through to prices of around 147p.

He added: “We hope the Competition and Markets Authority, which is currently reviewing the road fuel market in the UK, is keeping a watchful eye on this pricing behaviour as we believe it’s against the interests of diesel drivers up and down the country.”

Supermarket prices for petrol and diesel ‘unnecessarily high’

The UK’s biggest fuel retailers are overcharging for petrol and diesel, according to the RAC.

The motoring organisation said that prices were “far higher” than they should be after a decrease in wholesale costs.

In mid-October, the price of delivered wholesale unleaded hit 130p a litre while diesel rose to nearly 158p. Since then, prices have fallen significantly — petrol has dropped by 13p to 117p and diesel by 22p to 136p — but the biggest retailers haven’t been reducing their forecourt prices to the same extent.

The current average price of diesel at a supermarket is down 3p a litre from 187.54p at the end of October to 184.41p, while petrol has only gone down 4.4p from 165.36p to 160.96p.

“With many people struggling to put fuel in their cars it’s very sad to see the biggest fuel retailers taking advantage of their customers by charging far higher prices than they should be,” said RAC fuel spokesman Simon Williams.

“This is unfortunately a perfect example of prices falling like a feather, the opposite of them rocketing up as soon as the wholesale price rises significantly.”

Williams highlighted a “remarkable lack of competition” among the four main supermarket fuel retailers.

“If one of the supermarkets were to lead a round of price cuts, the others would follow suit which, in turn, would bring the average price of fuel down for the benefit of drivers everywhere,” he added.

“As it stands, there are smaller, independent forecourts offering more competitive prices than supermarkets so drivers should shop around.”

Inquiry launched into UK’s high fuel prices

The UK competition regulator has launched an investigation into the high cost of petrol and diesel at forecourts across the country.

The in-depth study by the Competition and Markets Authority (CMA) will look at the price differences between rural and urban areas, as well as the growing gap between the price of crude oil when it enters refineries and the wholesale price when it leaves refineries as petrol or diesel.

In an urgent review of the market published on Friday, the CMA found that although there were concerns about some retailers profiting from the current situation, this has not been a big contributor to the overall rise in pump prices.

Just over 40% of the growth in fuel prices (24p per litre) was attributed to increases in how much refineries are charging retailers for wholesale petrol and diesel.

The dollar-terms increase in oil prices over the last year accounts for around a third of the rise in fuel prices (20p per litre), with the fall in the value of sterling in that period adding a further 12% (7p per litre).

Sarah Cardell, CMA General Counsel, said: “While there is no escaping the global pressures pushing up fuel prices, the growing gap between the oil price, and the wholesale price of petrol and diesel, is a cause for concern. We now need to get to the bottom of whether there are legitimate reasons for this and, if not, what action can be taken to address it.

“On the whole the retail market does seem to be competitive, but there are some areas that warrant further investigation. These include finding out whether the disparities in price between urban and rural areas are justified.”

Cardell added that the CMA will use its formal legal powers to investigate the market in more depth, adding: “If evidence emerges of collusion or similar wrongdoing, we won’t hesitate to take action.”

Average cost of a tank of petrol hits £100 for first time

The average cost of filling a 55-litre family car has passed the £100 mark as fuel prices continue to rise.

Figures from the RAC show that refuelling at UK forecourts now costs an average of £100.27 for a full tank of petrol and £103.43 for diesel.

Prices shot up in February after major oil producer Russia invaded Ukraine.

The continued rise in fuel prices will likely worsen the cost of living crisis for motorists, as well as for consumers more generally as businesses will at some point look to pass on their rising costs, Sky News reported.

“With average prices so high — 182.31p for a litre of unleaded and 188.05p for diesel — there’s almost certainly going to be upward inflationary pressure which is bad news for everybody,” said RAC fuel spokesman Simon Williams.

“While fuel prices have been setting new records on a daily basis, households up and down the country may never have expected to see the cost of filling an average-sized family car reach three figures.”

Williams urged the UK government to offer more financial support to drivers, including a further duty cut or a temporary reduction in VAT on fuel.

Fuel prices stabilise after record highs

Forecourt prices for petrol and diesel have fallen back slightly but remain very high, according to the RAC.

The motoring organisation called for the chancellor to cut fuel duty in this week’s Spring Statement.

On Monday, the average pump price for a litre of petrol was 166.6p, down from 167.0p the day before, according to figures from data firm Experian Catalist quoted by Sky News.

The average price of a litre of diesel dropped from of 179.0p to 178.7p over the same period.

RAC fuel spokesman Simon Williams noted that Monday was the first day this month where average fuel prices did not reach new record highs.

“Prices steadied with very slight reductions in both petrol and diesel perhaps indicating that retailers may have finished passing on their increased wholesale costs for the time being,” he said.

The wholesale price of petrol for retailers currently stands at £1.30 and diesel at £1.48.

“With prices this high before retailer margin and 20% VAT are added it’s clear we are in a tough place when it comes to being able to afford to drive,” Williams added.

“This is why it’s crucial the chancellor takes decisive and meaningful action in his Spring Statement that helps hard-pressed drivers and businesses.”

Newspaper reports suggest that Sunak is considering a temporary cut in fuel duty of up to 5p per litre.

Fuel prices continue to climb

Forecourt prices of petrol and diesel have reached another record high, the AA said on Monday.

It comes after a further surge in oil prices following Russia’s invasion of Ukraine.

Data from Experian Catalist reported by the AA showed that petrol has now reached 155.62p a litre — or more than £7 a gallon — while diesel averaged 161.28p.

As a result, filling up a car with a 55-litre tank now costs nearly £17 more than a year ago — a rise from £68.60 to £85.59.

“A year ago, with pump prices rising steadily after the pandemic slump, 125p a litre was bad news but 155p was unimaginable,” said AA fuel price spokesman Luke Bosdet.

“Although with every pump price surge a slump eventually follows, notwithstanding the fuel trade’s reluctance to pass on savings quickly, £7 a gallon could well be a watershed moment.”

Oil prices jumped to $139 for a barrel of Brent crude — the highest level for almost 14 years — after confirmation from the United States that it was considering a boycott of Russian oil and gas.

And with no end in sight to the rise in oil and gas prices, analysts have warned that household energy bills could reach as high as £3,000 a year.