Source: Driver Trainer

RAC calls on government to intervene as fuel retail profit margins soar to 13p per litre

A bright photography of pumps with various colours at petrol station

With the average retail profit on a litre of fuel reaching at 13p in December—more than twice what it was in 2021—the RAC is pleading with the government to step in.

In December, the average price of petrol decreased by 6 pence per litre (ppl) to 146.69p in the UK, while the average price of diesel decreased by 5 ppl to 149.18p.

The price of unleaded has returned to what it was before Russia’s invasion of Ukraine in early February 2022, which caused the price of oil to soar to about $130 (£102). A barrel currently costs less than $80 (£63).

The RAC contends that if the top four supermarkets were taking reduced margins, pump prices ought to be even lower.

In Northern Ireland, diesel costs 5ppl less at 144.2p and petrol costs 5ppl less at just 135.28p compared to the UK average.

Additionally, both fuels purchased in Northern Ireland are less expensive than the average prices of 137.63p for petrol and 145.89p for diesel at the big four supermarkets.

Additionally, independent forecourt Grindley Brook in Whitchurch, Shropshire, charges 130.9p for petrol, which is 7ppl cheaper than their average of 137.63p, according to RAC data.

In the meantime, diesel costs 139.9p, which is 6ppl less than the average of 145.89p at supermarkets.

RAC fuel spokesman Simon Williams said: “While we’re starting the year paying much less at the pumps than we have done, it’s still galling to know that drivers aren’t being charged a fair price in comparison to Northern Ireland where the very same petrol and diesel is at least 5p a litre cheaper.

“It’s surely impossible to argue that competition is working properly if prices are so vastly different in two parts of the UK. And if an independent retailer in the middle of Shropshire can be undercutting the supermarkets by around 6p a litre, something has to be very badly wrong.”

The largest retailers are being urged by the RAC to reduce their prices to parity with those in Northern Ireland.

“We also urge energy security secretary Claire Coutinho, who is on a mission to bring greater transparency to fuel pricing following the Competition and Markets Authority’s investigation concluding drivers were overcharged to the tune of £900m in 2022, to ask the supermarkets why they won’t charge similar prices to the averages seen across Northern Ireland,” added Williams.

Additionally, according to RAC data, the delivered wholesale price of petrol is 104p. This means that unleaded should be sold at an average of 137p, rather than the current 140.6p, even with a margin of 10p per litre, which is 3p more than the long-term margin of 7p.

According to RAC calculations, supermarkets could drop as low as 132p instead of the present 137.63p.

Williams said: “In spite of the current overcharging, we strongly hope that 2024 will be the year when drivers finally get to see fairer pump prices.”

In November, the government declared that fuel retailers—including supermarkets—will have to disclose the difference between the amount they charge customers at their forecourts and their earnings.

If they don’t comply, the watchdog may impose a fixed fine equal to 1% of their global turnover or a continuous fine equal to 5% of their daily turnover.

It came after a CMA investigation that revealed big petrol merchants were continuing to profit from higher margins.

According to the CMA data, supermarket fuel margins were greater on a percentage basis from January to November of 2023 than they had been in prior years.

On a pence per litre basis, however, the CMA findings revealed that supermarket fuel margins were somewhat lower in 2022 due to decreased wholesale costs.

Regional pump prices

Unleaded 01/12/2023 31/12/2023 Change End of month variance to UK average
UK average 146.69 140.58 -6.1
East 147.53 140.79 -6.7 0.2
East Midlands 147.21 140.98 -6.2 0.4
London 148.85 142.41 -6.4 1.8
North East 146.44 139.89 -6.6 -0.7
North West 146.06 140.34 -5.7 -0.2
Northern Ireland 140.92 135.28 -5.6 -5.3
Scotland 145.22 139.18 -6.0 -1.4
South East 148.19 142.00 -6.2 1.4
South West 146.72 140.53 -6.2 -0.1
Wales 145.15 139.05 -6.1 -1.5
West Midlands 146.54 140.53 -6.0 -0.1
Yorkshire and the Humber 146.24 139.87 -6.4 -0.7
Diesel 01/12/2023 31/12/2023 Change End of month variance to UK average
UK average 154.33 149.18 -5.2
East 154.63 149.63 -5.0 0.4
East Midlands 154.19 149.63 -4.6 0.4
London 156.80 151.10 -5.7 1.9
North East 154.05 148.66 -5.4 -0.5
North West 153.77 148.61 -5.2 -0.6
Northern Ireland 149.40 144.20 -5.2 -5.0
Scotland 154.19 148.70 -5.5 -0.5
South East 155.94 150.63 -5.3 1.4
South West 154.65 149.40 -5.3 0.2
Wales 153.11 147.86 -5.3 -1.3
West Midlands 154.58 148.57 -6.0 -0.6
Yorkshire and the Humber 154.36 148.49 -5.9 -0.7