A fall in the cost of oil and a strengthening of the pound means retailers should be cutting the price of petrol at the pump.
Data from RAC Fuel Watch - and shown in the chart below - shows the wholesale price of unleaded has tumbled in the last week making it possible for the major supermarkets to slash at least 3p a litre off the forecourt price.
The average UK price of petrol stands at 131.56p a litre while the average price charged at the four big supermarkets is 128.02p. The wholesale price of unleaded has in the last few days dropped below £1 a litre which means the pump price of petrol at supermarket forecourts should really be around 125p a litre accounting for delivery, retailer margin and VAT.
Oil has fallen from a four-year high of $86.23 on 4 October to $81.20 on 11 October. Meanwhile the pound has improved against the dollar from $1.29 on 2 October to $1.32 on 11 October.
The price of diesel, however, is not due to come down, although the rises seen in recent weeks may have come to an end for the time being. The average price of diesel across the UK is now 136.44p while at the major supermarkets it is more than 3.5p cheaper at 132.63p. Diesel has risen by nearly 13p a litre this year while petrol has increased by 10p.
RAC fuel spokesperson Simon Williams said: “Major fuel retailers should be reacting to the sharp drop in the wholesale price of petrol by knocking at least 3p a litre off at the pumps. Motorists have suffered with rising petrol prices for most of this year with 10p a litre being added since the start of January.
“We are sure retailers will do the right thing and pass the savings on to drivers, but the question is how long will it take for them to do this. As this has come about as a result of a sudden drop in the wholesale price they can’t yet be accused of holding off on cutting, but if prices don’t fall soon then we fear this will be further evidence of the so-called ‘rocket and feather’ effect where prices go up far more quickly than they fall.
“The speed with which we have gone from seemingly endless pump price rises to a sudden moment when they should really be coming down very clearly demonstrates the volatility of wholesale fuel and how UK motorists are at the mercy of the international markets.
“The oil and currency changes have also improved the diesel price situation, with the constant rises coming to a halt for the time being.”