Oil companies are charging petrol stations 20p per litre more for diesel than they were just two days ago, leaving forecourt firms to either set high retail prices, or lose huge sums of money.
Smaller independent firms typically buy their fuel from oil companies on a daily or ‘spot’ basis, meaning the price they pay for wholesale fuel is set on the day the tanker delivers it.
Larger forecourt firms purchase fuel on a two or three-week ‘lag’, meaning they can currently sell fuel to drivers based on the price they paid when they entered their last agreement cycle with their suppliers.
One independent operator told Forecourt Trader they are now paying their oil company a little over £1.50 for a litre of diesel, roughly 23p per more than they were two weeks ago, while another has faced a 21 pence per litre (ppl) increase in the space of just 48 hours.
The Iranian conflict has led to a spike in global oil prices, with this impacting diesel in particular. The cost of unleaded is less impacted, but wholesale prices have still risen by around 8ppl in the last two weeks. Combined, the hikes mean independent operators are now paying around £4,000 more for a tanker of fuel than they were a couple of days ago.
Firms buying on a spot basis must therefore either raise their retail prices almost immediately to reflect their increased wholesale costs, leaving them looking uncompetitive next to larger firms; or leave their prices largely unchanged and lose money on each litre of fuel customers buy.
The rise in wholesale costs are set to impact all forecourts’ retail prices within 10 to 12 days, however, as lagged prices set before the start of the latest Iranian conflict elapse.
Speaking anonymously to Forecourt Trader, one independent operator said:
“The dramatic increase in fuel wholesale prices is putting retailers in a horrible place: if you don’t change your retail price, you lose a lot of money, but if you do, you risk being labelled a profiteer by drivers who are unaware of how the system works.
“I intend to be as transparent as possible with my customers about why my prices have jumped so much.”
