For the fourth consecutive month, petrol prices in the UK have seen a surge. On average, the cost per litre rose by 4.5p last month – a trend that’s steadily been fueling the nation’s worries over household expenses and the cost of living. With the price of unleaded petrol experiencing an inflation from £1.52 to £1.57 in September, filling up a family car now costs over £86.
According to the RAC, this unwelcome trend is largely due to the increasing global oil prices. However, they also contend that petrol is being unjustifiably overpriced. A point rigorously contested by independent forecourts, who insist that their pricing is neither unjustifiable nor unnecessarily high.
Speaking for the independent sellers who hold 64% of UK forecourts, the Petrol Retailers Association notes that their margins are under significant pressure. This is due to rising labour and energy costs, coupled with reduced sales.
Despite the slight ease in the UK’s cost of living as inflation falls to 6.7%, the continuous rise in fuel prices for both petrol and diesel exerts additional pressure on household finances. In September alone, on average, petrol prices went up by 4.5p per litre while diesel saw an increase of 8p per litre – a rise that has driven diesel costs from £1.54 to £1.63 per litre since the beginning of the previous month.
Simon Williams of the RAC asserts that their analysis shows petrol overpriced by approximately 7p a litre. He also calls attention to the surging gap in wholesale costs of diesel and petrol. Yet, despite diesel costing 10p a litre more than petrol in wholesale, this only translates to a pricing gap of 5p at the pumps.
This, Williams maintains, is proof of the overall unfair treatment drivers are receiving. He posits that if retailers were fair, petrol would cost at least 7p less per litre. In response, Gordon Balmer from the Petrol Retailers Association claims that increased margins are understandable, considering the higher running costs they face.
Williams also expresses concerns regarding the higher than usual retailer margins for petrol across the UK following a competition watchdog investigation earlier this year. This led to some retailers launching a scheme that allows drivers to compare live fuel prices online. The UK government now intends to make this practice mandatory.
Fuel prices climbed steeply during 2021 and the first half of 2022, bolstered by oil prices spiking post-Russia’s invasion of Ukraine. However, a brief period of respite was enjoyed late 2022 and into the first half of this year before prices began their rapid ascent again.
This latest increase is attributed to the decision by Saudi Arabia and Russia, two of the world’s largest oil producers and OPEC+ members, to curtail production earlier in August. Consequently, oil prices have spiked with Brent crude oil – a vital component of motor fuel – rising above $90 a barrel. Further compounding the problem, the weakening sterling has made wholesale fuel, traded in US dollars, costlier to procure in the UK.
