Motorists are being hit in the pocket every time they fill up, with diesel drivers paying around £4.40 too much per tank and petrol users £2.75 over the odds, according to claims by the RAC. The motoring organisation has accused fuel retailers of charging 5p per litre too much for petrol and 8p per litre over the odds for diesel, suggesting that the margins between wholesale costs and pump prices are significantly higher than historical norms.
The RAC’s findings come amid observations from the Competition & Markets Authority (CMA) that motorists are shelling out an eye-watering £1.6 billion more annually than they should, a situation attributed to poor competition among retailers, though the retailers argue that rising operational costs are to blame.
However, the RAC and regulatory bodies have highlighted that fuel prices tend to be lower in Northern Ireland, where competition is fierce. Despite wholesale prices indicating that cuts at the pumps were warranted, July saw petrol and diesel prices remain “stubbornly static” at 145p and 150p per litre respectively, the RAC reported.
The organisation stated: “Despite wholesale prices meriting cuts at the pumps, drivers are on average still paying 5p more than they should be for petrol and 8p too much for diesel. This translates to nearly £3 a tank (£2.75) for petrol and £4.40 for diesel.”
Further analysis by the RAC showed that average retailer margins stood at 13p a litre for unleaded, which was up by 3p in July, and at 14.5p for diesel, figures that soar above the long-term averages of 8p per litre. The report stated: “For contrast, drivers in Northern Ireland continue to get a much fairer deal with petrol on sale for an average of 140p (139.7p) and diesel for 142p (141.6p) a litre 5p and 8p lower than the UK average. This is because retailers there, unlike those in the rest of the UK, continue to take a margin of around 8p a litre.”
Filling up a 55-litre family car at the UK average petrol price of 145p costs nearly £80 (£79.62), while in Northern Ireland it’s around £77. “For diesel at 150p it is £82 (£82.39) versus just £78 (£77.88) in Northern Ireland.”
An analysis of supermarket fuel prices shows that a litre of unleaded averaged 142p and diesel 147p at the 1,664 forecourts operated by the four major brands 3p below the UK averages for both petrol and diesel. However, there are some stark differences between each brand’s lowest and highest prices. Buying petrol at an Asda-run forecourt anywhere apart from on the motorway can vary by as much as 18p a litre, which is the highest of any supermarket. The difference across all Tesco forecourts is the smallest at just 7p a litre.
For diesel, the gap between Asda’s low and high prices off motorways is 21p, with its rivals having a difference of around 13p. The government is planning to introduce a mandatory Pumpwatch scheme and app that will allow drivers to find the cheapest fuel in their area. It is hoped this will boost competition and lower prices.
Simon Williams, the head of policy at RAC, expressed his disappointment: “It’s disappointing to see fuel prices remain far higher than they should be, especially after the CMA announced at the end of July that drivers were overcharged by an astonishing £1.6bn last year.”
“With our analysis clearly showing margins are still significantly above the long-term average, it seems like nothing has changed and drivers continue to lose out despite all the ongoing scrutiny from the CMA and the Government. Coupled with this, the wholesale fuel market is trending lower due to the price of oil falling by $6 to around $80 at the end of July.”
“This in itself ought to lead to lower prices at the pumps but, as the CMA made clear in its report, competition in fuel retailing is extremely weak. As a result, we sadly can’t see pump prices reducing much further without retailers’ acting on what the CMA is saying and finally introducing some much-needed fairer pricing strategies. It must be incredibly galling for drivers to see the UK average price of petrol stubbornly static at 145p when the wholesale cost merits lower pump prices something clearly demonstrated by the fact those in Northern Ireland are paying 5p less. For diesel, things are even worse as the price difference is 8p.”
“The introduction of the Government’s Pumpwatch scheme can’t come soon enough, and neither can the setting up of the official price monitoring body, so long as the latter has the power to clamp down on retailers who consistently overcharge.”
The RAC has its own fuel finder app, designed to assist motorists in locating the cheapest fuel.