Petrol Retailers Driving a Hard Bargain
The RAC has called on major fuel retailers in the UK to slash prices by at least 5p per litre, claiming that consumers have yet to benefit from lower wholesale costs. Despite a Government-mandated duty cut last year, drivers are yet to see any signs of relief at the pump.
Pump Prices ‘Not Reflective’
The spike in oil prices following Russia's invasion of Ukraine was a significant factor contributing to the increased cost of fuel for British motorists. While wholesale oil prices have steadily fallen by nearly $20 a barrel, the RAC alleges that fuel retailers, particularly the big four supermarkets, have failed to adequately reflect these reductions in their pricing for petrol and diesel.
Big Four’s Profits
According to the RAC, major supermarkets are making staggering profits from their fuel stations, with an average of 16p per litre on unleaded petrol and 12p per litre on diesel in October 2023. This average represents a doubling of profits on petrol when compared to the average since 2012.
Asda says its fuel is 4p per litre cheaper than the national average. Competitors Tesco, Sainsbury's and Morrisons haven’t commented on this claim.
A recent investigation by the Competition and Markets Authority (CMA) has shifted the spotlight onto the pricing practices of supermarkets. The CMA found that despite the Government's fuel duty cut, increased profit margins offset the benefit for consumers.
Weak competition in the sector has allowed supermarkets to run up significant profit margins on fuel, resulting in mounting costs for drivers in the UK.
New Watchdog Wanted
Secretary of State for Energy Claire Coutinho has warned fuel retailers about closely monitoring prices to ensure they pass on savings. The Government's response has faced harsh criticism, with Shadow Transport Secretary Louise Haigh proposing the establishment of a ‘tough’ new fuel watchdog to protect consumers from the rising cost of living.
Motorists Hit in the Pocket
The RAC's call for a 5p per litre reduction comes at a time when drivers are grappling with rising costs in all areas of life. The discrepancy in petrol prices between Northern Ireland, where the major supermarkets have less of a grip on the market, and England, Scotland and Wales highlights the need for a fairer pricing structure.
RAC spokesman Simon Williams said: "Drivers are still losing out massively when wholesale prices come down. Drivers in Northern Ireland are getting a fairer deal with a litre of unleaded costing 150p and diesel 157p - 5p less than the UK average."
Consumers are eagerly awaiting relief at the pumps, especially given the current economic challenges.
The Road Ahead
The battle over petrol prices in the UK continues to intensify as the RAC urges major retailers to reflect lower wholesale costs at the pumps. With the Government's duty cut not translating into immediate relief and the CMA's investigation revealing profit-driven practices, leaving consumers feeling the pinch.
As discussions about a potential fuel watchdog gain momentum, the future of petrol pricing in the UK remains unclear.
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