Fuel retailers accused of overcharging motorists by £5m a day

The RAC has claimed that fuel retailers are ‘refusing’ to pass on the full savings from lower wholesale prices to motorists, resulting in drivers being overcharged by £5m a day in December.

Wholesale prices drop but pump prices remain high

According to the RAC, the average price of petrol in the UK fell by just 2p a litre in December, from 147.47p to 145.48p, despite wholesale prices dropping by 12p a litre. Diesel also fell by less than 2p a litre, from 150.80p to 148.92p, when it should have been around 142p.

The RAC said that retailers took an average of 16p a litre on petrol and 12.5p on diesel in December, instead of their usual margin of 6p a litre, making forecourt prices far more expensive than they should have been.

The motoring organisation estimated that retailers’ refusal to reflect lower wholesale prices at the pumps cost petrol car drivers £156m in December, or the equivalent of £5m a day. It said that it cost petrol car drivers £6 more to fill up a typical 55-litre family car than it should have (£80 vs £74) and for diesel nearly £4 more (£82 vs £78).

RAC calls for government intervention and transparency

The RAC’s fuel spokesman, Simon Williams, said that retailers’ resistance to cutting prices and to only pass on a fraction of the savings they were making from lower wholesale costs was ‘nothing short of scandalous’. He said that retailers took advantage of the media talk about ‘higher energy prices’ and banked on the oil price rising again and catching up with their artificially inflated prices, which it has now done.

Fuel retailers accused of overcharging motorists by £5m a day

He also said that every extra penny they took as margin led to drivers paying even more as VAT was added on top at the end of the forecourt transaction. He urged the government to ask the biggest retailers to explain why they were charging such high prices for fuel when wholesale prices had dropped.

He added that the chancellor’s fuel duty freeze in November was not enough to help motorists with the rising cost of living and that the government should consider cutting fuel duty to ease the pressure on drivers.

Retailers defend their pricing strategy and operational costs

However, the Petrol Retailers Association (PRA), which represents independent fuel retailers, disputed the RAC’s claims and said that the retail fuel market remained ‘extremely competitive’. It said that supermarkets did not use artificially low fuel prices to lure shoppers into their stores at Christmas and that drivers were likely to have benefited more than the RAC suggested.

It also said that December’s pump price data was less reliable because it was taken from fuel card transactions, which were fewer due to the reduction in business activity between Christmas and New Year.

The PRA’s executive director, Gordon Balmer, said that the costs of running petrol stations rose all year, with electricity up 19%, vastly reduced margins from fuel cards, increased national insurance and wage inflation. He said that these factors had to be taken into account when setting pump prices.

He also said that the wholesale price of fuel was not the only factor affecting retail prices, as there were also variations in delivery costs, regional taxes and exchange rates.

Asda and Sainsbury’s offer the cheapest petrol at the end of the year

An analysis of RAC Fuel Watch data revealed that Asda had the cheapest petrol at the end of the year, with a litre costing an average of 141.81p at their stores, followed by Sainsbury’s at 142.57p. Tesco and Morrisons were slightly more expensive, at 143.75p and 144.01p respectively.

The RAC said that Asda was the only supermarket to cut its petrol prices in December, by 2p a litre, while the others increased theirs by around 1p a litre. Diesel prices were also lower at Asda, at 145.81p a litre, compared to 146.57p at Sainsbury’s, 147.75p at Tesco and 148.01p at Morrisons.

The RAC said that drivers could save money by shopping around for the best fuel deals and by using fuel price comparison apps or websites.

By Ishan Crawford

Prior to the position, Ishan was senior vice president, strategy & development for Cumbernauld-media Company since April 2013. He joined the Company in 2004 and has served in several corporate developments, business development and strategic planning roles for three chief executives. During that time, he helped transform the Company from a traditional U.S. media conglomerate into a global digital subscription service, unified by the journalism and brand of Cumbernauld-media.

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