The PRA has hit back at criticism from the RAC about fuel margins by saying that petrol retailers are wrestling with skyrocketing increases to their costs and are offering motorists the best deals they can.
The RAC has written to Energy Secretary Claire Coutinho 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.
RAC Fuel Watch analysis revealed that the margin on diesel has been above 15ppl since April 2022 and last week increased to above 18ppl. The margin on petrol is now nearly 12ppl and has averaged 10ppl so far this year. The motoring organisation said the long-term average for both fuels is just 8ppl.
The RAC said margins have risen even more in the last week on the back of the cost of oil reducing from around $90 to the $83 mark, which has brought wholesale fuel prices down. It added that the average price of petrol stands at 150ppl while diesel is at 157ppl. If retailers were fairer to drivers, the RAC believes both fuels should be on sale for around 145ppl, given they have cost almost the same on the wholesale market for more than two weeks.
When the RAC analysis came out, Fair Fuel UK was quick to put out a press release stating that ‘PumpWatch is a failure’ while the national press was quick to put out stories about ‘extremely unfair’ fuel margins.
Gordon Balmer, executive director of the PRA, countered: “Retailers are having to contend with record levels of theft as well as increases in business rates, energy bills and the National Minimum Wage. Our members are committed to keeping pump prices as low as possible for their customers, but they are not immune to the impact of geopolitical events outside of their control.
“We have been working closely with the government as they develop their fuel price transparency scheme, which will help motorists find the cheapest fuel available to them in their area. It is disappointing that while we go through the relevant policy channels, we are forced to constantly devote time to correct media narratives surrounding fuel margins.
“Our retailers operate in a highly competitive environment and strive to give their customers the best deals possible. I have offered to brief several of the media commentators to explain the various cost increases that petrol retailers are experiencing, and how they feed through to prices at the pumps. Unfortunately, these offers are yet to be accepted.”
The government continues to work on its PumpWatch fuel price transparency scheme and the introduction of a price monitoring body. Ahead of that, it is operating a voluntary scheme with 14 of the biggest retailers providing prices for all their sites on a daily basis.
The RAC said it 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: “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.”
