Supermarkets have come under renewed criticism for refusing to lower petrol prices further, despite falling wholesale costs. The forecourts are not reducing the price at the pump by as much as they should to accommodate a significant price drop at the other end, says the RAC.
The motoring organisation claims that the gap between prices at the pump and wholesale prices are wider than they have been for 10 years. Prices on the forecourts were still around £1.76 for a litre this week, while analysis commissioned by the RAC suggested it should actually be at £1.62, because the average price for delivered wholesale petrol last week was £1.24, with diesel at £1.38.
The RAC said that forecourts should be selling unleaded for no more than £1.62 — even after taking into account fuel duty, VAT, and what it termed a "generous retailer margin" of 10p a litre.
Only a month ago, the supermarkets came under fire for keeping prices artificially high at the pumps when the RAC revealed how garages were not passing on the savings they were making, angering hundreds of thousands of motorists across the country.
Simon Williams, head of PR and external affairs at the RAC, said: "There appears to have been a big shift in the last few months in the behaviour of the four major supermarkets, which dominate UK fuel retailing, as they are now commonly being undercut by independent retailers that are passing on the wholesale cost savings they're benefiting from to drivers. This is unheard of, as the supermarkets are normally at least 3p a litre cheaper than the UK average."
Supermarkets have traditionally been cheaper than independent retailers because they buy fuel more often, meaning they can react more quickly when wholesale prices change. This was reflected in the speed at which they would pass on rising costs when wholesale prices increased, says Mr Williams, but now it appeared they were not so quick when it came to lowering them.
He said: "As the supermarkets account for so much of all the fuel sold across the country and they haven't lowered their prices as much as they should have, it means average UK prices have not come down in line with the significant drop in wholesale fuel."
The gap between retail and wholesale prices are bigger now than they were at the start of the pandemic, during lockdowns, and when the price of oil plummeted to around £10.50 per barrel. The current price of oil is around £79.71 per barrel.
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