Petrol retailers pocketing an extra 5p per litre in profit from drivers

Motorists were ripped off at the pumps in 2022 when retailers refused to pass on the full cost of fuel and pocket an additional profit of 5 cents from every liter of petrol sold.

This is evident from a new analysis by the RAC, which discovered this the average retailer margin on unleaded lead in 2022 was 13.5 pence (supermarkets 10.8 pence) – significantly higher than the 8.7 pence in the previous 12 months (supermarkets 5.8 pence).

The Athe average diesel margin was 10.3 pence (supermarkets 7.5 pence), up from 8.8 pence in 2021 (supermarkets 6 pence).

Before the pandemic, average margins in 2019 were just 6.5 pence for gasoline and 6.9 pence for diesel.

The RAC described it as a ‘hurtful situation’ for motorists during the cost-of-living crisis as retailers make more money by continuing to ‘keep pump prices artificially high’ and warned that prices could rise again soon if wholesale costs have started to creep up.

The report says that wholesale petrol has plummeted by 23 pence per liter in the nine weeks to December 11, but average pump prices have fallen by only 20 pence per liter over the same period.

The gap for diesel drivers was wider, with wholesale costs falling by 32 pence per liter over an eight-week period, while average costs at the pump in the UK fell by just 20 pence – a difference of 12 pence.

The motoring association says this is further evidence of “rocket and feather pricing,” just weeks after a watchdog investigation showed examples of it had been found last year.

The Competition and Markets Authority (CMA) said in December that 2022 was the ‘most volatile’ for fuel prices since reliable data began, with pump costs rising by about 50 pence per liter from January to July – the biggest jump in a year – before falling by 31p for petrol and 14p for diesel.

It said it had found “some evidence” of retailers over the past 12 months rapidly raising pump prices in response to rising wholesale fuel costs – the “rocket” – but then not passing on any savings as those costs fell – the “spring”.

Today’s update to the CMA has shown retailers pocketing larger margins than before as it continues its research into gasoline prices.

Company Secretary Grant Shapps wrote to fuel retailers on Dec. 22, urging them to “ensure savings are passed on to consumers” after it emerged drivers were hit by record fuel prices during the Christmas holidays.

Bodies representing the fuel sector defended taking extra margins, saying that gas stations are more expensive to operate than a year ago due to higher energy costs.

Could gas stations rise again in the coming days? The RAC warns that wholesale costs of petrol and diesel crept higher last week, which could soon be reflected at the pumps

“There is absolutely no reason for pump prices to rise” due to recent wholesale increases

While the RAC said it will provide its report to the CMA to bolster its investigation into the fuel sector, it warned drivers to brace themselves for retailers to raise pump prices soon.

It claimed that the gradual price cuts seen at UK petrol stations in recent months have now ‘crushed to a halt’ due to wholesale costs slowly starting to rise again last week.

How YOU can lower your fuel bill: our top 10 hypermiling tips that will help you use less petrol and diesel and save money

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RAC fuel spokesman Simon Williams said: ‘This is an embarrassing situation for drivers who are struggling more than ever given the impact of the wider cost of living crisis.

‘The question now is whether retailers will raise their prices.

This will depend on whether they decide to continue enjoying higher margins or return to more normal levels.

“Looking at current wholesale costs, there is absolutely no reason to increase pump prices.”

It was reported last week that ministers are currently examining plans for a fuel watchdog to prevent drivers from being scammed at the pumps.

Chancellor Jeremy Hunt and Mr Shapps would look at a system to force petrol and diesel retailers to pass on wholesale cost cuts to consumers.

A report on the situation is expected to be finalized by the end of February and a decision will be taken once the March budget is prepared.

Campaigners have called for an initial voluntary system, but believe powers, including the ability to name and shame garages ripping off drivers, could be deployed if retailers don’t take action.

Simon Williams from the RAC added: ‘We are urging the Government to ensure that retailers are quick to pass savings on to drivers whenever there is a significant downward movement in the wholesale price of fuel – not just to ensure that drivers not be treated unfairly, but also because there is a clear link between high fuel prices and higher inflation.’