The RAC has reported that drivers are facing an additional £5 charge when filling up their cars with petrol, as service station operators do not fully reflect the reductions in fuel duty and lower wholesale costs.
Despite a decrease in wholesale prices for petrol and diesel this year, petrol stations have been slow to adjust their retail prices, leading to higher profit margins, according to the RAC.
In March of the previous year, fuel duty was reduced by 5p per litre to help motorists cope with escalating petrol and diesel costs, which were partly a result of the conflict initiated by Russia in Ukraine. However, the RAC points out that these savings are not being adequately transferred to consumers. Currently, the cost to fill a typical 55-litre family car with petrol is about £80.62, which is around £5 more than it should be, while diesel vehicle owners are paying an excess of £2.50, with a fill-up cost of £84.92.
The RAC suggests that a more reasonable pricing would be around 137p for petrol and 150p for diesel, assuming a fairer profit margin for retailers.
Claire Coutinho, the Energy Secretary, addressed this issue in October by sending a letter to industry leaders. She cautioned that she would firmly criticize retailers who overcharge customers and fail to reflect the benefits of lower global prices in their pricing strategies.
Simon Williams from the RAC commented, “It appears that the major retailers have not taken seriously the cautions directed towards them. Although the initiative taken by the Energy Secretary might have prompted some retailers to start lowering their prices, it’s clear that these reductions are significantly delayed and insufficient.”
Oil prices soared to over $110 last summer due to the conflict initiated by Russia in Ukraine, but later stabilized. They surged again following an attack by Hamas on Israel, with Brent Crude reaching $93 the previous month. However, the prices have since moderated to around $78 a barrel, aligning more closely with the figures observed during the summer.
The RAC has presented its findings to the department of Ms. Coutinho. The Treasury Committee in Parliament discovered in July that the reduction in fuel duty was essentially being absorbed by petrol stations as increased profits.
Recently, the Competition and Markets Authority (CMA) cautioned that the decline in oil and wholesale petrol and diesel prices hasn’t been effectively passed on to consumers. The CMA proposed the establishment of an entity to oversee margins and pricing to ensure consumers benefit from these savings.
High fuel prices significantly contribute to food inflation, which, in turn, is a major factor in the cost of living crisis affecting many families.
Mr. Williams from the RAC remarked, “Had a price monitoring body been established by now, as suggested by the CMA and agreed by the Government, this situation might have been avoided, and consumers might be receiving fairer prices at fuel stations.”
He reiterated the RAC’s call for major retailers to significantly reduce their prices to reflect the substantial decrease in wholesale costs.
