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Petrol retailers accused of overcharging

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Written by: Emma Lunn
06/01/2022
The RAC said December was a ‘rotten month’ for petrol car drivers who lost out on £156m as retailers refused to pass on wholesale price savings.

The motoring group said that despite wholesale prices meriting big cuts at the pumps, the average price of petrol in the UK fell by just 2p a litre in December.

The high prices mean drivers overpaid by £156m for petrol last month, according to RAC Fuel Watch.

The price of unleaded petrol dropped from 147.47p a litre to 145.48p in December, but the RAC says drivers should really have seen prices nearer to 135p – but it said retailers were taking far bigger margins than normal. 

Diesel dropped by just under 2p a litre from 150.80p to 148.92p, but the RAC says drivers should have been paying about 142p.

The organisation calculated that instead of their long-term margin of 6p a litre, retailers took an average of 16p a litre on petrol and 12.5p on diesel in December. This made forecourt prices far more expensive than they would have been, had retailers not changed their fuel pricing strategy.

The price of a litre of unleaded on the wholesale market, including delivery, averaged 106p across the month. Had a 6p margin been taken drivers would have seen an average petrol pump price of around 135p after applying VAT at 20%. 

The average wholesale cost of delivered diesel was 112p a litre which, with the usual 6p retailer margin, would have given a pump price of around 142p.

This means it has cost petrol car drivers £6 more to fill up a typical 55-litre family car than it should have (£80 vs £74) and for diesel nearly £4 more with a tank costing £82 at the end of the month instead of £78. 

Simon Williams, RAC fuel spokesman, 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 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.

An analysis of RAC Fuel Watch data reveals Asda had the cheapest petrol at the end of the year with a litre costing an average of 141.81p at its stores, with Sainsbury’s not far behind at 142.57p. 

Asda also sold the lowest priced diesel at 144.9p a litre ahead of Tesco on 145.8p. The average price of motorway unleaded at the close of December was 160.55p while diesel was higher still at 163.43p.

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