Source: Intelligent Instructor


A gradual reduction in petrol and diesel prices since October has come to an end.

The warning comes from RAC Fuel Watch .

According to their data, price reductions at forecourts across the UK ground to a halt as wholesale prices have begun rising again.

Where’s the drop

Between mid-October and mid-December 2022, wholesale petrol costs tumbled by 23p per litre, leading to cuts of up to 18p at the pumps. Wholesale diesel prices fell by 32p, but pump prices only dropped by 20p per litre over the same period.

The RAC says that fuel retailers have failed to fully enclose the huge falls in wholesale costs,  “keeping pump prices artificially high”. This technique, known as “rocket and feather pricing”, occurs when pump prices quickly reflect increasing wholesale costs, but are slow to drop when costs decrease.



Pass it on

RAC fuel spokesman Simon Williams says: “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. As the Competition and Markets Authority is currently looking into retail fuel pricing and has even acknowledged the presence of ‘rocket and feather’ pricing, this is the prime time to take action for the benefit of consumers and businesses.”



Its official

The analysis backs up a report by competition watchdog the Competition and Markets Authority published last month. This says that drivers are the victims of “rocket and feather” pricing during 2022.

Business Secretary Grant Shapps wrote to fuel retailers on December 22 urging them to “ensure savings are passed on to consumers” after it emerged drivers were being hit by record Christmas getaway fuel prices.

However, this area of business is not as profitable for the forecourts as it seems.

Recently, analysis of fuel retailer business revealed that most make their profits on other products such as sandwiches and chocolates. For example, one business explained that a £100 sale of diesel at 193.9p per litre accounted for 51.57 litres of diesel — with a 4p-per-litre profit that leaves £2.06 for the filling station.

It  added that if the £100 is paid using a credit card, the card firm charges £1.69 in interest for the transaction. That leaves the garage with just 37p, and that’s before taking out overheads such as electricity, maintenance and wages.

A similar rundown shared by a family-run petrol station in Carmarthenshire In June 2022.  Of £50 spent on fuel : Tax (fuel duty)- £13.94; Tax (VAT) – £8.33; Wholesaler – £26.35. Total £48.62. It left £1.38 to pay rates, energy costs, wages, national insurance, pension contributions etc.