Fuel retailers under major pressure to reduce prices by at least 10p

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Major fuel retailers are facing even more pressure as the price of oil has dipped below $80 for the first time since the start of the year. The RAC is claiming that motorists across the UK should see a drop in prices by at least 10p per litre. 

RAC fuel spokesman Simon Williams said: “There is yet more pressure on the biggest fuel retailers today to pass on savings to drivers as the price of oil has dipped below $80 for the first time since the start of the year causing the wholesale cost of petrol to tumble to 105p a litre and diesel to 119p.

“If a cut of at least 10p a litre doesn’t come soon it will be yet more evidence of ‘rocket and feather’ pricing for the Competition and Markets Authority to take note of.

“The disparity between average pump prices at 158p for petrol and 182p for diesel and their wholesale equivalents is truly shocking.

“Even taking account of major retailers’ buying cycles, we can see no justification for them not cutting their prices significantly.”

Mr Williams added: “This failure to reflect falling wholesale costs over multiple weeks at the pumps is totally unreasonable.

“Whenever you have smaller, independent forecourts charging far less than the big four supermarkets, which buy far larger quantities of fuel on a far more frequent basis, it has to be a cause for major concern.

“Something badly needs to change to give drivers a fairer deal at the pumps and everyone will be looking to the CMA to instigate this.

“While our data shows there were clearly issues with ‘rocket and feather’ pricing before the pandemic, the situation is 10 times worse today.

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“What’s more, it really isn’t the case that volatility brought about by the war in Ukraine is to blame for what’s happening now as wholesale prices are now so much lower than they were nine weeks ago.”

On top of that, despite the average price of petrol and diesel falling by 6p a litre in November, data from RAC Fuel Watch shows that the reductions on the country’s forecourts should have been at least twice that.

According to the RAC, unleaded came down from 165.96p to 159.88p while diesel dropped from 190.31p to 183.87p, saving motorists more than £3 a tank. It now costs £91.28 to fill up 55-litre family-sized petrol car and £101.13 for a similar diesel vehicle.

The reason the RAC believes drivers have lost out is due to the wholesale price of petrol plummeting by 11p in November from 122.63p to 111.53p on top of significant reductions in late October.

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Diesel decreased by even more last month, coming down 15p from 143p to 128p.

Taking an average of wholesale prices for the last week of November (21-25), the RAC believes petrol should really be at an average of 146p and diesel to 169p – 14p and 15p lower than the current averages.

Consequently, the RAC believes retailers are now collectively enjoying margins of more than 20p a litre – a figure that drivers will find truly shocking as they struggle to put fuel in their cars to go about their daily lives.

Mr Williams said: “It’s bordering on a scandal that drivers are being overcharged so much because the big four supermarkets, which dominate UK fuel retailing, are flatly refusing to reduce their prices by bigger amounts.

“Their prices are dropping like a feather when they should be falling like a stone.

“In 10 years of closely monitoring fuel prices we have never seen major retailer margins this high for this long.

“It used to be the case before the pandemic that we’d see wholesale prices drop by 4p a litre and then the supermarkets would be vying with one another to announce a price cut to drive customers into their stores.

“This sadly seems to be a thing of the past as nowadays they appear to be hanging on to massive margins for dear life.”

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