Motorists are ‘right to feel angry’ as petrol pump prices only fall slightly last month despite the substantial drop in wholesale costs, says RAC.
The average price of the UK’s petrol and diesel dropped marginally in August, but garages chose not to fully pass on the savings to motorists, according to data from RAC Fuel Watch.
A litre of unleaded only fell 0.27p to 128.88p, despite the price reducing dramatically by 4.38p to 96.57p for retailers. The story was similar for diesel drivers, but not as pronounced, as the cost a litre decreased by 0.38p to 131.66p compared to the wholesale price falling by 1p a litre to 101.12p.
RAC fuel spokesman Simon Williams said: “Drivers have the right to feel angry that the price of fuel did not fall more in August than it did. With nearly 4.5p coming off the wholesale price of petrol drivers should have seen, at the very least, 2p a litre being knocked off at the pumps by the end of the month.
“While the average price charged by the supermarkets came down a little more than the UK average they should really have led the way with larger cuts which would have spurred other retailers to reduce their prices too.
“By our calculations retailers ought to be charging around 126p for a litre of unleaded based on a wholesale price of 98p a litre, which many retailers will have bought at a couple of weeks ago, and then factoring in delivery, a reasonable margin of 5p a litre and VAT. As for the supermarkets they could easily be selling at around 122p.
“If you look at the average cost of fuel in Northern Ireland you can see this is possible as the average price of petrol there is 126.01p and diesel is also more than 2.5p a litre cheaper at 129.02p. If Northern Ireland can charge a fairer price why can’t retailers in the rest of the UK do it. For this reason we strongly urge all retailers outside of Northern Ireland to cut their prices in the next week by at least 2p a litre on both petrol and diesel.
“The lower wholesale prices seen in August are a result of a 5% drop in the price of oil over the month with a barrel going down from $62.47 to $59.09. The other price-determining factor – the sterling US dollar exchange rate – changed very little over the month leading to a pound being worth $1.21 at both the start and finish.
“There was a time when a 4.5p reduction in the wholesale price would have led the supermarkets to cut their prices significantly, but unfortunately those days seem to have passed as they no longer appear to have the appetite for them despite the clear wholesale market dip. Perhaps they are hedging their bets thinking there could be a further drop in the value of sterling which will could cause wholesale prices to increase again.”
Pump image credit: Pixabay