The RAC has called upon prominent fuel retailers to decrease petrol prices by 5p per litre, aligning with their diminished wholesale costs. The impact of last year’s government-enforced 5p duty cut is yet to reverberate among the driving populace, according to the motoring body.
In the aftermath of Russia’s invasion of Ukraine last year, a surge in oil prices led to costlier filling at the pumps for drivers. However, current wholesale oil prices show a reduction, with the price per barrel having declined by nearly $20.
Fuel profit was mainly accumulated by the four major supermarkets, with an average of 16p profit from each litre of unleaded fuel sold in October and 12p from each litre of diesel. The profit on unleaded was twice the average as compared to profit margins since 2012, as per the RAC’s findings. Responding to the claim, Asda conveyed to the BBC that its prices were approximately 4p per litre lower than the UK average, while Tesco, Sainsbury’s, and Morrisons abstained from commenting.
Recently, the petrol pricing strategy of supermarkets has come under scrutiny following an investigation by the Competition and Markets Authority (CMA). Although last year’s fuel duty cut by Chancellor Jeremy Hunt faced initial scepticism due to a delay in reflected pump prices, the investigation later ascertained that the reduction had been passed. However, the CMA stated that the benefit had been nullified due to widening profit margins.
The CMA revealed a surge in fuel margins among supermarkets due to lacklustre competition, resulting in additional expenses for drivers. Consequently, retailers collectively agreed to initiate a scheme allowing motorists to compare current fuel prices online.
In the wake of Russia’s invasion of Ukraine, oil prices soared, with Brent crude reaching more than $120 a barrel in June 2022. Post the spike, oil prices retreated to a tad above $70 a barrel in March this year under the shadow of weak demand.
The most recent months saw oil prices rebound to approximately $90 a barrel, catalysed by major oil producers such as Saudi Arabia and Russia, limiting their output. Despite the upturn, wholesale prices still linger below those of the previous summer, prompting the RAC to urge retailers to echo these reductions at the pumps.
Simon Williams, RAC fuel spokesman, expressed, “Drivers continue to lose out substantially whenever wholesale prices decrease. However, in Northern Ireland, where supermarkets don’t monopolise fuel retailing, drivers are getting a fairer deal. Here, a litre of unleaded is priced at 150p and diesel at 157p – 5p cheaper than the UK average.”