Petrol retailers and the PRA have reacted furiously after the AA has accused fuel retailers of “major price distortion”, “adding an average of up to 6p to the price of a litre of diesel”, in order to charge their customers £3 a tank extra.
In its latest Monthly Fuel Price Report the AA says pump prices edged up in the last month despite the cost of oil going down, and AA president Edmund King commented: “Cars are like blank cheques for whoever feels the need to balance the books by plundering drivers’ pockets. Motorists prop up the Treasury to the tune of 10% of the UK’s total tax-take, and now the fuel retailers are taking £3 a tank extra on diesel to steady their finances.”
Andrew Lawrence of Lawrence’s Garages said: “The AA’s comments just show how out of touch they are.”
He said the cost of fuel to retailers had increased by 2.5ppl on all grades over the last week, but he had not passed this on to consumers. “We had to add 1ppl to unleaded because the profit was less than 1ppl, but for the AA to use words like ‘plundered’ is just out of order.”
On the differential between diesel and unleaded he said most diesel sales were to commercial customers using fuel cards so again margins were tightly squeezed.
PRA chairman Brian Madderson said many members had been in touch about the AA’s comments. He said: “They have been really disgusted by one of our primary motoring organisations making such hysterical and ill-informed comment.
“It seems as if the AA and RAC are competing to see who can grab the biggest headlines irrespective of how they do it. It is very frustrating that they are undermining independent retailers relatively precarious financial position.”
Referring to the diesel market specifically, he said: “More than 70% of the specialist high-speed offset diesel refuelling facilities are provided by the independent retailing sector, so ensuring that our fleets of buses, trucks, vans and cars are well catered for across the UK.
“However the diesel fleet market is dominated by the use of agency, bunker and oil company fuel cards which has driven margins to as low as 0.70ppl. Thus an HGV filling with 300 litres of diesel at around £350 sales value can provide the owner with little more than £2 to help pay for the costs of running and maintaining a complex technical installation. This would not be financially sustainable without realising higher margins from other fuel trades.
“In some cases, discounted diesel can be as much as 60% of the entire business of an independent retailer and we don’t have the benefit like big supermarkets of being able to cross-subsidise our fuel sales with high margin grocery sales
“In fact, nearly 900 independent petrol retailers closed for business in the five years up to 2014, which just confirms how close to the edge many are operating.
“We reach out to the motoring organisations to better understand the structure of the UK fuels market and help the smaller retailers survive in an increasingly competitive market otherwise the spectre of ‘rural fuel deserts’ becomes an ever closer reality.”