Drivers have missed out on the full benefit of a major fall in wholesale fuel prices with retailers pocketing much of the benefit, motoring organisation the RAC has said. The organisation now fears retailers are poised to hike prices again.
The RAC says that wholesale petrol costs have plunged by 23p, but prices at the pump have only been reduced by 18p. The situation is more extreme for diesel vehicle drivers: Wholesale diesel costs have plunged 32p per litre - but the pump price has only fallen by 20p in the same period.
The RAC’s data shows that price reductions at forecourts ground to a halt this week due to wholesale prices starting to slowly rise again, bringing retailer margins back to more normal, fairer levels. But the RAC's fear now is that retailers waste no time in putting pump prices back up despite there being no justification for doing so.
The motoring body said that supermarkets used a "rocket and feather strategy" to boost their profits, with consumer prices rising rapidly when wholesale prices go up but then dropping more slowly as the price on world markets falls.
Read more: Asda and Morrisons leading supermarket petrol price war
According to PetrolPrice.com that compares prices around the UK, the cheapest in the Cardiff area is 141.9p and 142.7p at Asda stores in the city, while in Swansea the cheapest is 141.7p at Asda on Upper Forest way and and the Texaco in Llansamlet.
The RAC claims retailers - including some of the UK's biggest supermarkets, like Tesco, Sainsbury's, Asda and Morrisons - make more money out of drivers from every litre of fuel they sell by "keeping pump prices artificially high".
RAC analysis shows that in 2022, the average retailer margin on petrol was 13.5p a litre (supermarkets 10.8p), significantly higher than the 8.7p it was in 2021 (supermarkets 5.8p). The average diesel margin last year was 10.3p (supermarkets 7.5p), up from 8.8p in 2021 (supermarkets 6p). Prior to the pandemic, in 2019 average retailer margins were just 6.5p for petrol and 6.9p for diesel.
RAC fuel spokesman Simon Williams said: "Wholesale fuel prices plummeted from the middle of October last year, yet supermarkets – which dominate fuel retailing in the UK and as a result buy new supplies very frequently – took weeks to begin cutting prices in a serious way. What’s more, not only were they slow to pass on wholesale price reductions, cutting prices by less than 2p a week over the course of three months, they also didn’t go far enough, especially when it came to reducing the price of diesel on their forecourts.
“This is a galling situation for drivers who are struggling more than ever given the impacts of the wider cost-of-living crisis. The question now is whether retailers start to bump up their prices. This will depend on whether they decide to continue enjoying larger margins or let them return to more normal levels. Certainly, looking at current wholesale costs there is absolutely no justification pump prices to rise. If pump prices do rise in the coming days, this will be further evidence of the biggest retailers taking advantage of motorists.
"We urge the Government to focus on ensuring retailers quickly pass on savings to drivers every time there is significant downward movement in the wholesale price of fuel - not just to ensure drivers aren't treated unfairly, but also because there is a clear correlation between high fuel prices and higher levels of inflation."
The analysis backs up a report by competition watchdog the Competition and Markets Authority published last month, which said drivers were the victim of "rocket and feather" pricing in 2022.
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