Petrol and diesel prices: UK wholesalers still not passing price drop to customers

Wholesalers are not passing lower oil costs to drivers when they fill their cars, according to RAC.

Between mid-October and mid-December 2022, wholesale petrol costs tumbled by 23p per litre yet average pump prices took almost another month to fall by just 18p, the RAC has said.

The situation is even bleaker for those driving diesel engines: wholesale prices plummeted by 32p a litre over eight weeks yet average pump prices came down only 20p a litre, after most recently peaking at 190.41p a litre at the end of October.

Read more: Petrol and diesel supermarket prices can differ 13p a litre in a 10-mile radius

RAC fuel spokesman Simon Williams said: “Our data shows that when wholesale prices increase, pump prices tend to rise very soon afterwards. Yet, when wholesale prices fall it takes far longer for forecourt prices to come down. This is the ‘feather’ element of what’s commonly known as ‘rocket and feather’ pricing.

“Wholesale fuel prices plummeted from the middle of October last year, yet supermarkets – which dominate fuel retailing in the UK and as a result buy new supplies very frequently – took weeks to begin cutting prices in a serious way. What’s more, not only were they slow to pass on wholesale price reductions, cutting prices by less than 2p a week over the course of three months, they also didn’t go far enough, especially when it came to reducing the price of diesel on their forecourts”.

RAC said that in 2022, the average retailer margin on petrol was 13.5p a litre (supermarkets 10.8p), higher than the 8.7p it was in 2021 (supermarkets 5.8p).

The average diesel margin last year was 10.3p (supermarkets 7.5p), up from 8.8p in 2021 (supermarkets 6p). Prior to the pandemic, in 2019 average retailer margins were just 6.5p for petrol and 6.9p for diesel.

Read more: Supermarkets ‘refusing’ to pass on lower fuel prices to drivers, RAC says

Williams said “this is a galling situation for drivers who are struggling more than ever given the impacts of the wider cost-of-living crisis,” while urging the government to “focus on ensuring retailers quickly pass on savings to drivers every time there is significant downward movement in the wholesale price of fuel – not just to ensure drivers aren’t treated unfairly, but also because there is a clear correlation between high fuel prices and higher levels of inflation.”

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