Petrol pump

Average fuel prices fell by 9ppl during December, but the RAC insists they should be lower still and highlights the market in Northern Ireland where prices are much lower than in the rest of the UK.

RAC Fuel Watch data shows petrol fell by 8.4ppl last month to 151.06ppl, while diesel came down by 9.4ppl to 173.97ppl.

The average price of petrol at the big four supermarkets reduced by 10ppl from an average of 157.86ppl to 147.76ppl and diesel and was down 11.4ppl from 181.66ppl to 170.23ppl.

Wholesale prices remained largely unchanged with petrol averaging 106ppl throughout December while diesel was 123.4ppl.

Based on these wholesale prices and allowing for a 10ppl retailer margin – 3ppl more than the long-term average – the RAC believes petrol should be being sold for 140ppl – 11ppl less than the current average. And it claims diesel should be nearer to 160ppl – 14ppl lower than the average at the end of 2022.

To back up its claims it points to membership-only retailer Costco, which consistently charges some of the lowest prices in the UK, and is currently charging a store-wide average of 137.3ppl for petrol and 158.4ppl for diesel.

RAC fuel spokesman Simon Williams said: “On the face of it, December looks like it was a good month for drivers with 9ppl coming off at the pumps on top of November’s 6ppl, but there’s no question that the drop should have been far bigger given how far wholesale prices have come down.

“For weeks we’ve been calling on the big four supermarkets to cut their prices more substantially to give drivers a fairer deal when they fill up, so even though they have reduced their prices collectively by more than 10ppl in December, they are still nowhere near where they should be given the scale of the drop in wholesale prices. We hope the business secretary’s intervention just before Christmas puts more pressure on larger retailers to do the right thing.

“Looking at prices in Northern Ireland is a good reference for what should be happening across the rest of the UK as petrol was 4.5ppl cheaper there than the UK average at the start of December but was nearly 7ppl lower at the end of the month at just 144.43ppl. For diesel the difference is even more pronounced as a litre was 7p cheaper at the beginning of December and 9.5p less by the close at 164.55p.

“If fuel can be sold this cheaply in Northern Ireland, then this must mean something is very wrong with fuel retailing in mainland UK.

“While Northern Ireland does benefit from a fuel price checker website run by the Consumer Council this isn’t the main reason prices are lower there. A combination of factors contributes to making fuel cheaper including a higher retailer-to-car ratio than in the wider UK, more fuel distributors as well as the presence of sometimes cheaper fuel across the border in the Republic of Ireland. Interestingly, the supermarkets also don’t have the same hold on fuel retailing in Northern Ireland with only 28% market share compared to 43% on the other side of the Irish Sea.

“In Europe prices are also considerably cheaper as the average price of a litre of unleaded is 144p and diesel 152p. And just across the Channel in France unleaded is an average of 146p and diesel 154p. In fact, when compared to the 27 EU countries we currently have the second most expensive diesel and the sixth most expensive petrol.”