The price retailers are paying is an average of 103ppl for unleaded petrol, with forecourts charging drivers 142ppl, according to RAC Fuel Watch data.
However, the motoring service suggests that even if firms pocketed a healthy profit of 10ppl, which is 2p more than the long-term 8p average, they could cut prices down to an average price of 136ppl.
The average price of diesel is 147ppl, but the motoring service says this ought to be 139ppl, based on the wholesale cost of 106ppl. Again, this is based on retailers taking home a 10p margin.
Instead of the 10p margin recommended by the RAC, retailers are adding an average of 13p margin for petrol and 15p on their diesel sales.
Simon Williams, RAC’s head of policy, called the reluctance of the biggest firms to drop prices for fuel as “outrageous”, following the extension of the temporary 5p fuel duty cut that has stood since the Spring Budget in 2022.
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Further, last year, drivers paid £1.6bn more than they should have on fuel due to the generous profit margins retailers had introduced, a Government report found.
The Russian invasion of Ukraine influenced the rising cost of wholesale fuel, which led to a price hike at the pumps.
However, since the prices have slowed down, the ‘top four’ UK petrol supermarket retailers – Asda, Morrisons, Tesco and Sainsbury’s – haven’t followed suit.
Indeed, compared to five years ago, supermarkets doubled their margins, according to Competition and Markets Authority (CMA) data for the year to April 2024.
Retailers should ‘do the right thing’
Williams said: “While the Competition and Markets Authority has clearly stated drivers were overcharged last year, it’s blatantly apparent from our data that this problem is persisting this year.
“Once again, we urge retailers to do the right thing and reflect the lower prices they’re paying for wholesale fuel on their forecourts.
“It’s plain for all to see from some of the lower prices being charged around the UK, both across the whole of Northern Ireland and at various other forecourts, that fuel can and should be sold much more cheaply.”
The cost for drivers to fill up their tank in the UK – the most expensive place to do so in Europe – dropped from last month’s average of 145ppl to 142ppl after two months of petrol prices stalling.
In contrast, some smaller UK retailers are forcing their larger competitors to provide better rates. One example saw EG On The Move, a new forecourt in Portlethen in Scotland, open with an alternative that was 16ppl cheaper, leading to the nearest Asda in the area price-matching its smaller independent rival.
Another case occurred in Whitchurch in Shropshire, at a place that charged 130.9ppl for unleaded petrol and 133.9ppl for diesel.
Williams said: “If a small individual retailer like DA Roberts at Grindley Brook in rural Shropshire is comfortable charging 131p a litre for petrol, surely the multimillion-pound businesses that are the big supermarkets ought to be able to get much nearer to that?
“If prices don’t fall dramatically in the next week or so, we believe the Government and the CMA should get all the biggest retailers together to demand an explanation.”
He added: “Tough action needs to be taken to change this as drivers are losing out badly every time they fill up. Artificially high pump prices also contribute to a higher level of inflation – so if prices were nearer where they should be, inflation would be lower, benefitting borrowers and the wider economy.”
