But the motoring organisation also claims that the Government’s 5p cut in duty, brought in shortly after Russia’s invasion of Ukraine last year, is not benefitting drivers. They believe retailers are using it to increase their margins.
War on the motorist
RAC’s analysis shows that despite oil trading around $90 a barrel and sterling only being worth $1.20, the delivered wholesale price of petrol averaged just over 113p last week. It means that the UK average price of unleaded standing at 155.33p is delivering a retailer margin over 16p a litre before VAT is applied.
This is in stark contrast to the long-term average of 7p a litre. It is also far higher the 10p margin that smaller, independent retailers argue is now fair due to inflation.
Diesel, which is currently averaging 162p across the country, is overpriced by around 4p a litre, it added.
Last week, a litre of wholesale diesel averaged 123p meaning average retailer margin is around 12p, compared to the 8p long-term figure tracked by the RAC since 2012.
An investigation by the Competition and Markets Authority in the summer concluded the big four supermarkets had overcharged drivers by 6p a litre in 2022. This total up to nearly £900 million of extra profit.
RAC fuel spokesman Simon Williams said their analysis shows that despite the investigation, “nothing has changed.
“Drivers are still losing out massively when wholesale prices come down.”
Live and direct
The investigation recommended that retailers should publish live prices to allow customers to compare different providers. This has begun to take place, especially amongst big retailers and supermarkets, but prices remain high. There is not any news as to when a pump price watchdog may be set up.
Williams believes that “drivers and, indeed, the Treasury should be furious” about the price and profit margins, especially considering the VAT cut and the cost of living crisis.
“There is no doubt from studying RAC Fuel Watch data that margins are up across the board, and while retailers argue their costs have increased due to inflation, the irony remains that there is a definite link between pump prices and consumer price inflation.
“A failure to cut pump prices to fairer levels when there is a clear opportunity to do so has the effect of keeping inflation artificially high – which is clearly in nobody’s interest.”