FUEL PRICE FAIRNESS: Drivers still paying over the odds at the pumps
The RAC has recently alerted Energy Secretary Claire Coutinho to the issue of inflated fuel retailer margins, emphasising that UK drivers continue to face higher costs at the pumps than is justified.
Despite government efforts to improve transparency in fuel pricing and ongoing scrutiny by the Competition and Markets Authority (CMA), retailer profits remain stubbornly high.
Fuel Watch analysis by the RAC shows that diesel margins have consistently been above 15p per litre since April 22, peaking last week at over 18p. Petrol margins are nearing 12p per litre, with an average of 10p this year, significantly above the long-term average of 8p for both fuels.
These margins have increased further in the past week, even as the cost of oil dropped from around $90 to $83, reducing wholesale fuel prices. Currently, the average price for petrol is 150p per litre and diesel 157p. The RAC argues that a fair price for both fuels should be around 145p, based on their similar wholesale costs for over a fortnight.
To combat these high margins, the Government is promoting increased competition through its proposed mandatory Pump Watch fuel price transparency scheme and a new price monitoring body. In the interim, a voluntary scheme with 14 major retailers is in place, providing daily price updates for all their sites. The RAC supports this initiative but stresses that a robust price monitoring body is essential to enhance competition and ensure retailers are held accountable for their pricing strategies.
RAC fuel spokesman Simon Williams said: “We feel the current margins being charged by larger retailers in particular are extremely unfair on drivers struggling to get by in the cost-of-living crisis. The big four supermarket retailers, which dominate fuel sales, are once again flatly refusing to cut their prices in the wake of much lower wholesale costs. If they were being fair on drivers, they should already have shaved at least 5p off their current petrol average of 147p and 8p off diesel which averages 154p at a supermarket forecourt.
“Our data shows the supermarkets are taking about 11p a litre on petrol and 16p on diesel compared to 3p and 8p in 2019.
“We realise that supermarkets, along with all businesses, have been affected by inflation, but these increases seem blatantly unfair. And, of course, without them cutting their prices, there is little incentive for other retailers to follow suit.
“Having tracked fuel prices against consumer inflation, it’s easy to see the link between the two. We therefore have a strange situation where unreasonably big fuel margins are making inflation higher than it should be.
“It’s very concerning to see fuel margins at such high levels, particularly as this is happening under the close eye of the CMA and while retailers are voluntarily sharing their forecourt prices with the intention of increasing competition.
“If the work of Department for Energy Security and Net Zero and the CMA has had any effect to date on improving fuel price transparency, we ought to see prices at the pumps reduce significantly in the next week due to a sustained drop in the cost of oil. Sadly, we fear retailers are likely to need a little more encouragement before this happens.
“The RAC believes the situation will only be improved in the long term if the CMA as the price monitoring body is able to take meaningful action against retailers whose margins are deemed not to be mirroring significant reductions in the cost of wholesale fuel.”
