The PRA has rejected claims by the RAC that fuel prices are too high because retailers are not passing on reductions in wholesale prices.
The motorists organisation is calling for a government inquiry if prices at the pumps do not fall.
According to the RAC the price of oil fell by $10 a barrel to $73.18 on Friday on top of already lower wholesale prices, and it claims petrol is now around 12ppl too expensive while diesel is 10ppl too high.
Unleaded is currently at an average of 147.64ppl and diesel is 150.85ppl. However, had retailers been reflecting the downward movement in the wholesale market, the RAC says they should really be 135ppl and 141ppl respectively.
PRA executive director Gordon Balmer said: “Members mostly buy fuel from their fuel supplier on a weekly lagged basis. Therefore, if they need to order deliveries for this week then they are charged at the average of last week’s product price values.
“In addition to this, they have been hit by the ‘double whammy’ of reduced sales and rising costs. Members continually monitor prices daily to ensure that they remain competitive with their industry counterparts and continue to provide good value for money.”
RAC fuel spokesman Simon Williams said: “Ten days ago we highlighted that petrol was 6ppl too expensive due to a fall in the wholesale price. Sadly, the biggest retailers, who lead the market, have stood strong and taken advantage of their customers by collecting bigger profits on every litre they sell than they traditionally do.
“On Friday news of the Omicron Covid variant caused $10 to be shaved off the oil price leading to a further drop in the wholesale price of fuel. We estimate that retailers are now making around 19ppl which is shocking when you consider their average margin pre-Covid was 6ppl. The profit on diesel is around 15ppl with a similar long-term average margin to petrol. Based on the fact the biggest retailers buy new supply every week we believe unleaded is 12ppl too expensive and diesel about 10ppl too dear.
“While retailers might resent the RAC pointing out that their fuel is overpriced, this doesn’t change the fact that they should cut. And if they don’t, we feel they will lose credibility with drivers, although it’s very difficult for motorists to vote with their feet because they have nowhere else to go.
“If a substantial cut doesn’t materialise, we feel this is worthy of government scrutiny as there’s no public body monitoring fuel prices to see if they’re fair.”