The RAC claims new analysis proves that retailers have failed to fully reflect the recent fall in the wholesale price of fuel at the pumps, with drivers of diesel vehicles suffering the most.
Over a nine-week period between mid-October and mid-December it reports wholesale petrol costs fell by 23ppl while average pump prices took almost another month to fall by a total of 18ppl, after peaking at 166.54ppl at the end of October.
The RAC claims this was largely due to supermarkets not cutting their prices far enough or soon enough. They cut their prices by 20ppl over this period.
The fall in the wholesale price of diesel was even greater, down 32ppl over eight weeks while average pump prices came down 20ppl, after peaking at 190.41ppl a litre at the end of October. Average supermarket diesel pump prices fell by the same amount.
The RAC also reported: “Price reductions at forecourts ground to a halt this week due to wholesale prices starting to slowly rise again, bringing retailer margins back to more normal, fairer levels.”
Looking at data for the whole of 2022 the RAC said the average retailer margin on petrol was 13.5ppl (supermarkets 10.8ppl), compared with 8.7ppl in 2021 (supermarkets 5.8p). The average diesel margin last year was 10.3ppl (supermarkets 7.5ppl), up from 8.8ppl in 2021 (supermarkets 6ppl). In 2019, prior to the pandemic, it said average retailer margins were 6.5ppl for petrol and 6.9ppl for diesel.
RAC fuel spokesman Simon Williams said: “Our data shows that when wholesale prices increase, pump prices tend to rise very soon afterwards. Yet, when wholesale prices fall it takes far longer for forecourt prices to come down. This is the ‘feather’ element of what’s commonly known as ‘rocket and feather’ pricing.
“Wholesale fuel prices plummeted from the middle of October last year, yet supermarkets – which dominate fuel retailing in the UK and as a result buy new supplies very frequently – took weeks to begin cutting prices in a serious way. What’s more, not only were they slow to pass on wholesale price reductions, cutting prices by less than 2ppl a week over the course of three months, they also didn’t go far enough, especially when it came to reducing the price of diesel on their forecourts.
“This is a galling situation for drivers who are struggling more than ever given the impacts of the wider cost-of-living crisis. The question now is whether retailers start to bump up their prices. This will depend on whether they decide to continue enjoying larger margins or let them return to more normal levels. Certainly, looking at current wholesale costs there is absolutely no justification pump prices to rise. If pump prices do rise in the coming days, this will be further evidence of the biggest retailers taking advantage of motorists.
“We urge the government to focus on ensuring retailers quickly pass on savings to drivers every time there is significant downward movement in the wholesale price of fuel – not just to ensure drivers aren’t treated unfairly, but also because there is a clear correlation between high fuel prices and higher levels of inflation.
“As the Competition and Markets Authority is currently looking into retail fuel pricing and has even acknowledged the presence of ‘rocket and feather’ pricing, this is the prime time to take action for the benefit of consumers and businesses.”
No comments yet