The government has warned it will “not hesitate to call out retailers who rip off the public” by not passing on lower wholesale prices to motorists buying fuel at the pumps.
Writing in a letter to industry executives, Claire Coutinho, the energy secretary, said the government and regulators were taking steps to protect consumers amid a sharp rise in prices over recent weeks.
Against a backdrop of rising global energy costs, average petrol prices have risen by about 13p a litre since June to stand at 156.1p by mid-October, while diesel prices have surged by about 18p to 162.4p a litre, according to the RAC Fuel Watch.
However, the RAC said fuel retailers had ramped up their profit margins while wholesale petrol and diesel costs remained steady in recent weeks. According to a report by the motoring organisation, wholesale petrol prices averaged just over 113p last week, while the average retailer margin was 16p a litre before VAT was applied – more than double the long-term average figure of 7p.
For diesel the margin was 12p, compared with an 8p long-term average, on data tracked by the RAC since 2012.
“Drivers are still losing out massively when wholesale prices come down,” said Simon Williams, the fuel spokesperson at the RAC. “There is no doubt from studying RAC Fuel Watch data that margins are up across the board.”
Economists have warned global oil prices could soar further if the war between Israel and Hamas escalates further, with the potential to drive up petrol and diesel costs and add to inflationary pressures.
Coutinho said that current global uncertainty for energy prices meant it was important for customers to be able to trust businesses to remain fair in their approach to pricing. “I know that families are continuing to face cost of living pressures and it is important that retailers pass on fuel price savings at the pump as quickly as possible,” she wrote.
Labour said the government had failed to take action after an investigation by the Competition and Markets Authority found in July that fuel retailers had overcharged motorists by a total of £900m last year.
Louise Haigh, the shadow transport secretary, said: “It has been 15 months since government ministers promised they would act on unfair petrol costs. Now we’ve seen what that action is – a strongly worded letter.”
Gordon Balmer, the executive director of the Petrol Retailers Association, which represents independent fuel retailers, said many of its members actively undercut supermarkets, highlighting a dynamic market.
“In the face of ongoing market volatility, our retailers are dedicated to ensuring their customers receive the best deals possible. I encourage motorists to make use of all the resources available to find the best deals possible,” he added.
