Petrol prices have seen a continuous upward trend for the fourth consecutive month, with an average increase of 4.5 pence per litre in the last month, according to the RAC.
In September, the price of unleaded petrol surged from approximately £1.52 to £1.57, resulting in the cost of filling a family car exceeding £86.
The RAC attributes this rise in fuel costs to the surge in global oil prices but also asserts that petrol is currently being sold at an “overpriced” rate.
Independent fuel retailers, on the other hand, argue that their pricing is not unjustified, citing increased labor and energy costs, as well as decreased sales, as factors that have placed margins under pressure.
Although there has been a slight alleviation in the overall cost of living in the UK, with consumer price inflation dropping to 6.7%, the escalating prices of both petrol and diesel are expected to put additional strain on household finances.
The RAC’s latest data for September reveals that petrol prices increased by 4.5 pence per litre on average during the month, while diesel prices surged by 8 pence per litre. Diesel prices have risen from £1.54 to £1.63 per litre since the beginning of the previous month.
Simon Williams, the spokesperson for the RAC, asserts that their analysis suggests that petrol is currently overpriced by approximately 7 pence per litre. He highlights the growing disparity between wholesale diesel and petrol prices, with diesel now being 10 pence per litre more expensive, despite a 5 pence per litre difference at the pumps.
Williams suggests that if retailers were more equitable, petrol prices should be at least 7 pence cheaper, reducing the average cost to around £1.50 per litre from the current £1.57.
Gordon Balmer, the executive director of the Petrol Retailers Association, counters the RAC’s claims, citing the inevitable increase in margins due to rising operational costs. He expresses his concerns over attempts to incite public outrage by suggesting otherwise.
Mr. Williams, however, raises concerns about the higher retailer margins for petrol, as identified in a prior investigation by the Competition and Markets Authority into supermarket giants Asda, Sainsbury’s, Morrison’s, and Tesco, who dominate the fuel retail market.
The investigation found that weak competition had led to increased supermarket margins on fuel, resulting in higher prices for consumers. Some retailers have since agreed to create a scheme that allows drivers to compare live fuel prices online, and the government intends to make this practice mandatory.
The BBC sought comments from all four supermarket chains regarding this issue. Asda claimed to remain the “cheapest place for drivers to fill up across the UK,” offering unleaded petrol at an average of 4.8 pence cheaper.
Sainsbury’s welcomed greater pricing transparency in the fuel market and emphasized consistently offering among the lowest fuel prices in their operating areas. They also mentioned using profits to absorb inflation and keep grocery prices as low as possible.
The recent surge in fuel prices can be attributed to Saudi Arabia and Russia, both OPEC+ members and major oil-producing nations, deciding to reduce production in August. This decision has driven up oil prices, with Brent crude oil surpassing $90 per barrel.
Additionally, the weakening value of sterling has made wholesale fuel, traded in US dollars, more expensive in the UK.
To mitigate the impact of rising fuel prices, consumers can adopt several practices, including driving at the most fuel-efficient speed (45-50mph), turning off air conditioning to reduce energy consumption (which can increase fuel consumption by up to 10%), and regularly checking tire pressure to prevent extra petrol
Last Updated: 04 October 2023