Rising fuel costs and retail disparities demand Government and CMA action, says RAC
April has seen another sharp rise in fuel costs, with both petrol and diesel increasing by 10p per litre since the beginning of the year, elevating the cost of filling a family car by £5.50, according to the latest RAC Fuel Watch data.
This month, unleaded petrol prices climbed by 3p to 149.95p per litre, while diesel prices rose by 2p to 157.76p per litre. This surge has pushed the cost of a 55-litre petrol tank to £82.47, an increase of £1.70, and diesel to £86.77, up by £1.10. The year's lowest prices were recorded on 16 January, at 139.7p for petrol and 147.6p for diesel.
These continual hikes are placing significant strain on household budgets. The RAC is urging the Government and the Competition and Markets Authority (CMA) to address major concerns in fuel retailing highlighted since major retailers began daily price publications last September.
The RAC's calls for action are underscored by the CMA’s findings that drivers were overcharged by £900 million in 2022 due to unfair retailer margins. The RAC suggests that if major retailers adopted fairer pricing, benefits would include:
Reduced fuel prices across the UK mainland, aligning with Northern Ireland's prices, which are about 5p per litre cheaper.
Elimination of the postcode lottery, where prices vary significantly between forecourts, sometimes by as much as 36p per litre.
An end to the rapid price increases at forecourts when wholesale costs rise, known as 'rocket and feather' pricing.
Fairer pricing for diesel drivers, who often face higher charges as retailers increase diesel margins to subsidise petrol prices.
April’s RAC Fuel Watch indicates a dramatic increase in retailer margins despite the CMA’s concerns raised at the end of March. The average margin on unleaded now stands at 9.5p per litre, with diesel margins soaring to 17.5p, a 6p increase in April alone. Historically, the average margin for both fuels is around 8p.
Supermarket analysis by the RAC at April’s end showed disparities ranging from 8p to 36p per litre among individual brands. Both BP and Shell also displayed significant price variations; for petrol, BP had a 24p spread and Shell 28p, while diesel differences were 30p for BP and 28p for Shell.
The RAC is advocating for the CMA and the Government to intervene to ensure fair pricing and transparency in the fuel retail market, thereby alleviating some of the financial pressures on UK drivers.
RAC fuel spokesman Simon Williams said: “Drivers are once again having to dig deep just to go about their daily lives. Our data shows petrol and diesel have now gone up 10p a litre so far this year on the back of further increases in April of 3p and 2p respectively.
“Some of this is down to the oil price and the pound-to-dollar exchange rate making wholesale petrol more expensive for retailers to buy but unfortunately, it’s also very apparent that retailers are making massive margins on diesel. To put this into perspective, the wholesale price of diesel has been lower than petrol since the middle of April, yet diesel is nearly 8p a litre dearer at the pump. If retailers were treating drivers fairly this gap would be starting to close, instead of getting wider.
“This has prompted the RAC to call on the Government and the Competition and Markets Authority (CMA) to get to grips with unfair retailer margins once and for all via the imminent ‘Pump Watch’ scheme and the creation of a price monitoring body. Worryingly though, the CMA’s warning shot about higher retailer margins at the end of March appears to have fallen on deaf ears, meaning drivers are once again being seriously overcharged for diesel.
“We also badly need to bring fuel prices on the UK mainland down to match those in Northern Ireland. We can clearly see that the average cost of fuel in Northern Ireland is around 6p cheaper than the UK average, which is inexplicable**. While the same disparity between petrol and diesel exists, prices are still much lower than the rest of the UK.
“Finally, we look forward to other fuel retailer brands operating in Northern Ireland – such as Maxol, Go and SPAR – beginning to share their prices with the CMA, which will shed even more light on the pump price gulf that exists, and reinforce our call for retailers this side of the Irish Sea to do the right thing.”
