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UK fuel price cuts not enough, RAC claims

Date: 06 January 2022   |   Author: Sean Keywood

The average price of both petrol and diesel at UK filling stations fell in December, according to the RAC.

However, the motoring organisation said the price drops from retailers were nowhere near enough to reflect falls in the wholesale cost of the fuels.

It reported the average price of a litre of petrol went from 147.47p to 145.48p during the month, while the average litre of diesel went from 150.8p to 148.92p - but argued wholesale prices meant petrol should have cost nearer to 135p per litre, while diesel should have been down to around 142p.

RAC spokesman Simon Williams said: "December was a rotten month for drivers as they were taken advantage of by retailers who rewrote their pump price strategy, costing motorists millions of pounds as a result. 

"Their resistance to cutting prices and [decision] to only pass on a fraction of the savings they were making from lower wholesale costs is nothing short of scandalous. The 10p extra retailers have added to their long-term margin of 6p a litre has led to petrol car drivers paying £5m more a day than they previously would have.

"In the past when wholesale prices have dropped retailers have always done the right thing -eventually - and reduced their pump prices. This time they've stood strong, taking advantage of all 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.

"The trouble is every extra penny they take as margin leads to drivers paying even more as VAT gets added on top at the end of the forecourt transaction. This means the Treasury's coffers have been substantially boosted on the back of the retailers' action. We urge ministers to push retailers into doing the right thing for consumers."

Defending the industry, Petrol Retailers Association executive director Gordon Balmer said: "December's pump price data is less reliable because it is taken from fuel card transactions, and there have been far fewer of these transactions because of the reduction in business activity between Christmas and New Year. With pump prices falling towards the end of the month, car drivers travelling over the holiday period are likely to have benefited more than these figures suggest.

"While the retail fuel market remains extremely competitive, supermarkets did not use artificially low fuel prices to lure shoppers into their stores at Christmas. 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.

"The latest volume figures as supplied by the Department for Business Energy and Industrial Strategy reveal that for most of December volumes were running at 90% of pre pandemic levels, and for week ending 26/12/21 at 78%. When volumes fall and operating costs are rising, it makes sense for fuel retailers to raise margins if they are remain in business to serve their customers."