Retailers are taking advantage of the distraction caused by the general election to charge higher prices for fuel in the UK, according to the RAC. The lack of political pressure, which has previously forced down pump prices, is allowing garages to keep profit margins high. Currently, the average price of a litre of petrol is 146.3p and diesel is 151.5p. The RAC claims that profit margins are now as high as 14p for petrol and 16p for diesel, compared to a long-term average of 8p for each. This means that it now costs £3 more to fill up a 55-litre tank of a typical family car with petrol and £5.50 more with diesel.
The RAC highlights that lower prices in Northern Ireland, at 141.1p for petrol and 141.9p for diesel, show how cheap fuel should be across the rest of the UK. The organization argues that pump prices haven’t fallen in line with the reduction in wholesale prices, resulting in drivers losing several pounds every time they fill up. Simon Williams, the RAC’s head of policy, suggests that retailers have no good reason not to cut their prices further and believes they may be capitalizing on the distraction of the general election.
However, the Petrol Retailers Association (PRA) argues that the RAC’s data overlooks several critical factors. PRA executive director Gordon Balmer points out that operating costs have increased, fuel volumes have decreased post-pandemic, and substantial investments are required for the transition to a low-carbon transportation system. Balmer believes that fuel retailers need to earn more from fuel sales in order to stay in business and invest in the future.
The price of petrol and diesel at the pump is largely determined by the wholesale price of Brent crude oil. However, fluctuations in the price of crude oil can take weeks to filter through to the forecourts. The price of crude oil has fluctuated significantly in recent times, going up nearly $12 per barrel since July 2023, falling to around $78 in October 2024.
In July 2023, a report from the Competition and Markets Authority (CMA) revealed that drivers paid on average 6p per litre more for fuel in 2022 due to supermarkets taking advantage of weakened competition and inflated pump prices. Asda and Morrisons, the two cheapest fuel sellers, were found to have targeted higher margins, causing prices to rise. Other retailers, including Sainsbury’s and Tesco, also raised their prices in line with these changes, indicating weakened competition in the market.
The CMA estimated that drivers paid 13p per litre more for diesel from January 2023 to the end of May 2023 than they would have if margins had been at their historic average. To address the lack of competition in the retail road fuel market, the CMA recommended a “fuel finder scheme” that would provide drivers with access to live, station-by-station fuel prices on their phones or sat-navs. The CMA also suggested the creation of a new monitoring body to hold the industry accountable.
The RAC supports the CMA’s recommendations and emphasizes the need for action. They believe that while forcing retailers to publish pump prices is a positive step, it is more significant to have a fuel-monitor function within the government that actively monitors wholesale prices to prevent overcharging by forecourts. Without such measures, the RAC fears that drivers will continue to be at a disadvantage.
In conclusion, the distraction of the general election has allowed retailers to charge higher prices for fuel in the UK. The RAC argues that profit margins are now much higher than the long-term average due to a lack of political pressure. However, the Petrol Retailers Association counters that operating costs and the transition to a low-carbon transportation system require higher fuel prices. The Competition and Markets Authority has highlighted the lack of competition in the retail road fuel market and recommended a fuel finder scheme and a new monitoring body. The RAC supports these recommendations and calls for action to ensure fairer prices for drivers.
