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[NEWS] UK fuel prices 'should be at 171p per litre', RAC claims

UK fuel prices 'should be at 171p per litre', RAC claims

1petrolweb1 0097

Big four supermarkets blamed for not dropping forecourt prices, despite falling costs of wholesale fuel

Supermarkets are not passing savings from cheaper wholesale fuel onto customers, the RAC claims, adding that petrol prices should now be nearer to 171p per litre.

Yesterday, UK petrol and diesel pump prices began to fall for the first time in months, having soared well beyond record levels, which pushed the average price of a fill-up far north of £100. 

Currently, average forecourt prices sit at 186.87p per litre for petrol and 195.91p for diesel. At the beginning of July, prices sat at 191.53p and 199.07p.

But Simon Williams, the RAC's fuel expert, told Autocar that average prices should be around 171p for petrol and 189p for diesel, in line with the falling price of wholesale fuel, which has been dropping for the past seven weeks. The price of wholesale fuel has surged due to the rising cost of crude oil, which has been driven up by the ongoing war in Ukraine. It currently sits at 135p per litre for petrol, before tax and margins are added.

Williams blames the big four supermarkets – Asda, Morrisons, Tesco and Sainsbury's – for not dropping prices. Their forecourts normally sell fuel for 4p less than the national average, he added, which helps drive down prices elsewhere.

"For some reason, they refuse to give drivers a fair price," he said. "They should have been passing on [wholesale fuel price] reductions on a daily basis for the last seven weeks, but they have not."

Speaking about where fuel prices could be by the end of the month, he said: "At this rate, it is likely that prices will come down by just a couple pence."

The AA took a different view, claiming drivers could see savings of £10 per tank of fuel within two weeks, if wholesale prices continue to fall. The price of a full tank has dipped by £1.50 since the start of the month, a spokesman added.

"Wholesale petrol's trajectory, if sustained, would lead to savings of a tenner off a tank from the record highs, providing the fuel trade is prepared to pass them on,” Luke Bosdet, the AA's fuel price spokesman told the BBC.

"The problem is that, in many places, the price cuts are quite simply not happening despite more than six weeks of falling costs.”

This worry was echoed by a government watchdog, which promised a full review into how to stop the rising cost of fuel in the UK after it raised a “cause for concern”.

The Competition and Markets Authority (CMA) found that there was, on average, a difference of around 10p per litre on the wholesale price of fuel being bought by retailers and what it was selling it for at the pumps.

However, even though the drop in wholesale fuel is now making its way to drivers, worry still remains that prices will need to plateau.

David Cox, an independent energy analyst, told the BBC that while oil prices have dipped, they are likely to remain elevated due to the ongoing war in Ukraine.

"It's difficult to see how crude does anything but go up while the war rages, and that's not good news in the medium term for petrol prices," he said.

Another factor in the rising costs is down to Europe’s ambition to become less dependent on Russian supplies.

"The trouble is you just can't replace the volume of oil that Russia produces," Cox added.

"There might be minor changes up and down, but essentially crude is likely to keep marching upwards and that will keep the pressure on petrol prices upwards too."

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