The U.K.’s Competition and Markets Authority (CMA) recently published a report. It further demonstrates how UK drivers are being overcharged at the petrol pump as fuel prices have failed to reflect recent decreases from the oil market. Today’s analysis reveals that the wholesale cost of petrol has fallen through the floor, dropping by more than 7p per litre since the end of November. Yet at the gas station, the average price has dropped by just two-thirds of a cent. This gap has been dangerous for drivers and has caused confusion and alarm, particularly with the upcoming holiday travel period.
Our initial analysis of the CMA’s findings shows that the average petrol price should be 135p per litre. At the same time, diesel is at record highs averaging 142p per litre. Petrol and diesel prices are down by 8p per litre compared to last year. This drop consecutively stems from the falling crude oil cost, positive exchange rates, and a decreased cost of refining. The report does shed light on a more troubling trend when it comes to pricing behavior.
Dan Turnbull, senior director of markets at the CMA, pointed out the ongoing issue of high fuel margins despite decreasing costs.
“Fuel margins remain at persistently high levels – and our new analysis shows operating costs do not explain this,” – Dan Turnbull.
The report further illustrates that the VAT charged at the pump should be removing an estimated 8.4p from prices. The cost saving on consumers would be close to £4.60 per tank, thanks to this change. This only highlights more the gap between what wholesale prices are and what drivers are shelling out at the pump.
The AA has been highly vocal about their displeasure with this pricing trend. An AA spokesperson stated,
“This is classic ‘rocket and feather’ pricing at the pumps and the bane of UK drivers.”
This comment is illustrative of a deeper issue within the industry. Retail prices go up dramatically fast when wholesale prices rise, but retail prices fall much more slowly when wholesale prices drop. This practice forces drivers to feel the pain at peak demand, especially at peak travel seasons such as Christmas.
Turnbull acknowledged the significance of fuel prices for drivers, especially during the festive period when many individuals go on long journeys across the country. He emphasized the importance of initiatives like the fuel finder scheme, which aims to empower motorists and help them save money on fuel.
“We know fuel costs are a big issue for drivers, especially at this time of year with millions making journeys across the country. This is why the fuel finder scheme is crucial – it will put power back in the hands of motorists and save households money,” – Dan Turnbull.