RAC urges big retailers to slash petrol prices by 5p a litre due to lower wholesale costs

The Royal Automobile Club (RAC) is pressing the UK’s leading fuel retailers to cut the price of petrol by at least 5p a litre to 150p to reflect their far lower wholesale costs.

As it stands the Government’s 5p duty cut brought in shortly after Russia’s invasion of Ukraine last year is not benefitting drivers struggling to cope with the cost-of-living crisis and, instead appears only to be helping retailers who have chosen to up their margins.

Despite oil trading around $90 a barrel and sterling only being worth $1.2, the delivered wholesale price of petrol averaged just over 113p last week which means, 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.

Even diesel, which is currently averaging 162p across the country, is overpriced by around 4p a litre. 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.

The news of much higher-than-average margins revealed via the RAC’s analysis of wholesale and retail fuel prices* is very concerning given the Competition and Markets Authority 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 £900m. The RAC is worried recent history already appears to be repeating itself.

The 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.

Simon Williams, RAC’s fuel spokesman, expressed his dismay at the situation, saying that despite the CMA’s investigation confirming that drivers were being overcharged – a concern the RAC has voiced for years – the situation remains unchanged. He highlighted that while retailers are publishing live prices and tools like the myRAC app’s fuel finder feature are available to drivers, what’s being charged at forecourts countrywide is disproportionately high given the decreased wholesale petrol costs.

The RAC has apprised the Treasury that its 5p duty reduction isn’t benefiting drivers as intended. Now, the club is challenging the big four supermarkets, responsible for selling about half of all fuel purchased by drivers, to justify their continued high prices.

Williams concluded, “We urgently need the government to establish the price monitoring body as recommended by the CMA, with powers to act against major retailers that don’t reflect the wholesale market’s downward trends. While independent retailers might feel compelled to defend themselves, it’s crucial to note that this issue is not of their making.”