Insurance, breakdown and used-car firm RAC has again criticised the “retailer behaviour” of forecourt operators, claiming there is “seemingly no justifiable reason” for the average cost of a litre of unleaded to have increased by 0.77 pence, or £0.0077, over the last month.
The firm says the average cost of a litre of unleaded rose from 134.64p to 135.41p over September, with diesel going up from 142.19p to 143.14p, a rise of 0.95p, or £0.0095.
The RAC says there was “no real movement in the cost of oil in September” and estimates that average margins for UK fuel retailers stand at 11ppl. The firm compares this to Northern Irish forecourts, which often operate on a different model, and estimates NI retailers make 4p on every litre of fuel they sell.
The RAC is owned by Singaporean sovereign wealth fund GIC, Jersey-based private equity (PE) company CVC Capital Partners, and California-based PE firm Silver Lake. It has long been a critic of UK fuel retailers both when prices rise, and when they fall.
When retail prices dropped in August the RAC said it was “disappointing that high retailer margins are preventing drivers from benefitting from lower prices”, while its data for May, which indicated prices reached a four-year low, saw the company say that there was “plenty of room for retailers to do more”.
More recently, the RAC called the Competition and Markets Authority’s latest quarterly report on fuel prices “very concerning”.
At the time, the Petrol Retailers Association deemed the CMA’s analysis of the sector “incomplete” due to the watchdog’s insistence on benchmarking fuel margins against 2017 prices, and the fact it fails to take into account the rising energy, staff and borrowing costs the sector faces. The CMA itself admitted it “does not consider developments in operating costs” when assessing the industry.
Commenting on September’s 0.77p and 0.95ppl price rises, Simon Williams, the RAC’s head of policy, again referenced the CMA’s latest report, calling it “disappointing”, adding:
“Sadly, pump prices crept up by a penny a litre in September reversing the drop drivers saw in August. The fact prices have risen at all was made worse by the fact that there was little to no movement in the price of oil, or the pound-to-dollar exchange rate – the prime determiners of fuel prices – and therefore seemingly no justifiable reason for an increase.
He observed that the RAC is “grateful” for the CMA’s “scrutiny” of the sector but lamented its lack of impact “on retailer behaviour”, concluding: “The comparison with average prices and margins in Northern Ireland makes the point that it is possible to sell fuel more cheaply and still make money.”
