The RAC has this week written to Energy Secretary to draw her attention to
the fact that retailer margins on fuel are far higher than they
should be and that drivers are still losing out at the pumps.
Despite the Government getting retailers to make fuel prices
publicly available on a daily basis, and the Competition and
Markets Authority (CMA) continuing to scrutinise prices following
its report last year which concluded major retailers had
overcharged by £900m in 2022, average margins on fuel remain
‘unreasonably' high.
RAC Fuel Watch analysis
reveals the margin on diesel has been above 15p a litre since 22
April and last week increased to above 18p. The margin on petrol
is now nearly 12p a litre and has averaged 10p so far this year.
The long-term average for both fuels is just 8p.
Margins have risen even more in the last week on the back of the
cost of oil reducing significantly from around $90 to the $83
mark, which has brought wholesale fuel prices down.
The average price of petrol stands at 150p a litre while diesel
is at 157p. If retailers were to be fairer on drivers, the RAC
believes both fuels should be on sale for around 145p, given they
have cost almost the same on the wholesale market for more than
two weeks.
The Government is endeavouring to tackle high retailer margins by
trying to increase competition with its proposed mandatory Pump
Watch fuel price transparency scheme and the introduction of a
price monitoring body. Ahead of that, it is currently operating a
voluntary scheme with 14 of the biggest retailers providing
prices for all their sites on a daily basis. The RAC is
supportive of the scheme but has told the Secretary of State that
it believes a price monitoring body with teeth is key to
increasing competition and holding retailers to account.
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.”
Ends
Notes to Editors
* UK average pump prices quoted are based on Competition and
Markets Authority data. Margins are calculated based on wholesale
data, oil price and the value of sterling provided by Fuel Prices
Online.
