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Fuel retailers facing mounting pressure from RAC to reduce petrol prices by at least 5p per litre



Fuel retailers in the UK are facing mounting pressure from the RAC to reduce petrol prices by at least 5p per litre.


The RAC argues that the current prices do not accurately reflect the lower wholesale costs that retailers are benefiting from, and instead, place an excessive burden on drivers already struggling with the cost of living.

Although the UK Government implemented a 5p duty cut following the invasion of Ukraine by Russia last year, the impact of this reduction does not seem to be reaching consumers. Instead, it appears that retailers have taken advantage of the situation to increase their profit margins.


Despite the average wholesale price of petrol being just over 113p per litre, the average retail price stands at 155.33p, resulting in a margin of over 16p per litre before the addition of VAT. This is double the long-term average margin of 7p per litre and significantly higher than the 10p margin advocated by smaller independent retailers to account for inflation.

Diesel prices are also a cause for concern as they are currently overpriced by approximately 4p per litre. Last week, the wholesale price of diesel averaged 123p per litre, resulting in an average retail margin of around 12p. Comparatively, the RAC has been tracking a long-term retail margin of 8p since 2012.


The RAC's analysis of fuel prices raises concerns, especially considering that a previous investigation by the Competition and Markets Authority found that the big four supermarkets overcharged drivers by 6p per litre in 2022, resulting in significant costs for consumers. The RAC fears that history may be repeating itself with the current excessive margins observed in the market.


RAC fuel spokesman Simon Williams said: “Our analysis sadly shows that despite the Competition and Markets Authority’s investigation confirming drivers were being ripped off at the pumps – something we have been saying for years – and the Government acting on the findings, nothing has changed. Drivers are still losing out massively when wholesale prices come down. But in Northern Ireland where the supermarkets don’t dominate fuel retailing drivers are getting fairer deal with a litre of unleaded costing 150p and diesel 157p – 5p less than the UK average.


“Drivers and, indeed, the Treasury should be furious that the 5p-a-litre duty cut, which has been in place since the end of March 2022 is not being passed on at forecourts. There is no doubt from studying RAC Fuel Watch data that margins are up across the board, and while retailers argue their costs have increased due to inflation, the irony remains that there is a definite link between pump prices and consumer price inflation. A failure to cut pump prices to fairer levels when there is a clear opportunity to do so has the effect of keeping inflation artificially high – which is clearly in nobody’s interest.

“Our data shows the big four supermarkets’ margin on petrol has been around 14p this month compared to an average of 7p so far this year and, shockingly, this is up from just 3.4p for the whole of 2019.


“While big retailers are publishing live prices and we’ve made finding the cheapest fuel easy for every driver via the fuel finder feature in the myRAC app, this isn’t enough as what’s being charged on forecourts up and down the country is simply too high in relation to lower wholesale petrol prices.


“We badly need the Government to set up the price monitoring body recommended by the CMA and for it to carry powers to take action against big retailers that don’t reflect downward movements in the wholesale market such as we’ve been experiencing in the last six weeks.


“We have informed the Treasury that its 5p duty cut isn’t helping drivers as intended and we’re now calling on the big four supermarkets, which lead the retail market by virtue of the fact they sell around half of all the fuel bought by drivers, to explain their steadfast refusal to cut prices to fairer levels.


“Sadly, we know this is highly unlikely to happen and instead, at best, we’ll get another banal statement from the British Retail Consortium while independent retailers will feel the need to defend themselves, despite us recognising that this isn’t a problem of their making.”

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