The UK’s biggest fuel retailers are taking an additional 5p for every litre of petrol sold to drivers, according to the latest report.
The RAC said that the average price of unleaded stands at 155.3p per litre, though should be down to 150p based on wholesale costs for retailers in recent weeks.
It said the failure to pass on these savings is the equivalent to retailers pocketing the Government’s 5p duty cut brought in shortly after Russia’s invasion of Ukraine last year to help struggling families cope with the cost-of-living crisis.
Instead, the RAC says the fuel duty cut is only acting to ‘help retailers who have chosen to up their margins’, which should make drivers and the Treasury ‘furious’.
‘Both drivers and the Treasury should rightfully be furious’: The RAC says the biggest UK petrol retailers are pocketing the 5p-a-litre fuel duty cut introduced by the Government in March 2022 to help struggling families during the cost-of-living crisis
A barrel of oil is trading at around $90, meaning the delivered wholesale price of petrol averaged just over 113p last week.
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,’ the RAC explained.
Even diesel, which is currently averaging 162p across the country, is overpriced by around 4p-a-litre, it estimated.
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.
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, says the RAC
The news of much higher-than-average margins revealed via the RAC’s analysis is said to be ‘very concerning’ given the Competition and Markets Authority (CMA) 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 £900million.
The RAC is worried recent history already appears to be repeating itself.
The watchdog’s 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 CMA’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.’
The RAC has calculated the average retail margins made on both petrol and diesel in the last eight years, showing they are making far bigger profits today than they were in 2016. There’s almost a 5p-a-litre average margin increase pre and post-Ukraine war, it says
However, not all drivers across the UK are being ripped off by retailers.
In Northern Ireland, where the supermarkets don’t dominate fuel retailing, drivers are said to be getting a fairer deal with a litre of unleaded costing 150p and diesel 157p – 5p less than the UK average.
Mr Williams said both drivers and the Treasury should rightfully 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.
‘Our data shows the big four supermarkets’ margin on petrol has been around 14p this month compared to an average of 7p so far this year and, shockingly, this is up from just 3.4p for the whole of 2019.’
He added: ‘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.
‘We have informed the Treasury that its 5p duty cut isn’t helping drivers as intended and we’re now calling on the big four supermarkets, which lead the retail market by virtue of the fact they sell around half of all the fuel bought by drivers, to explain their steadfast refusal to cut prices to fairer levels.
‘Sadly, we know this is highly unlikely to happen and instead, at best, we’ll get another banal statement from the British Retail Consortium while independent retailers will feel the need to defend themselves, despite us recognising that this isn’t a problem of their making.’
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