The cost of petrol and diesel in Britain are at ‘rip-off levels’ – even before the crash in the price of oil that has taken place this week, a campaigner claims.
Howard Cox, founder of FairFuelUK, said average prices of a litre of unleaded and diesel should be 98p and 106p respectively, but are around 10p higher on average at retailers.
He claims that even before Monday’s oil price collapse – falling into the negative for the first time in history – the UK’s fuel supply chain had ‘dishonestly held back’ falls in wholesale costs which took place last month, as figures show that retailers were doubling profit margins in March.
‘Rip-off levels’: Campaigners and petrol price experts have pointed fingers at fuel retailers for not passing on savings to motorists in the last month
The average price of a litre of petrol in Britain is 110.05p, while diesel is 115.13p-a-litre, according the RAC Fuel Watch data accurate to 19 April.
This means unleaded is currently around 12p higher than what Mr Cox estimates it should be, while diesel is some 9p more expensive.
Retailers will argue that with fewer vehicles on the road due to the coronavirus lockdown they still have stock of fuel purchased weeks ago at higher prices due to the significant decline in sales.
However, FairFuelUK says the industry has still held back on motorists and not passed on the savings drivers should be entitled to.
Mr Cox said: ‘Even with 70 per cent less fuel being sold, the dishonesty from these faceless businesses, using the coronavirus crisis as a smokescreen to maintain their profits, beggars belief.
‘It’s time the Government really looked after the highest taxed drivers in the world and our vital haulage industry, and introduce PumpWatch as a matter of emergency.
‘An independent pricing watchdog is vital to protect our economy and allow essential workers to fill up their vehicles with the fairest and most honest prices at the pumps.’
Howard Cox from FairFuelUK said the UK’s fuel supply chain had ‘dishonestly held back’ falls in wholesale costs which took place last month
A review of March fuel prices by the AA revealed that retailers had been doubling their profit margins by not passing on savings to motorists.
Since the middle of March and mid April, the average pump price of petrol has fallen 11p-a-litre.
The AA said that while this would normally be a cause for celebration among drivers, it reflects less than 60 per cent of the savings that should have been passed on to them.
Average petrol pump prices have fallen from 121.28p a litre in mid-March to 110.40p last week, while diesel dropped 8.36p in the same period, from 124p to 115.64p.
At the same time, the wholesale price of petrol has stalled at around 16p-a-litre for the past three weeks.
Even including fuel duty (57.95p per litre) and VAT of 20 per cent, the AA said the price of petrol should have already dropped below £1-a-litre, had retailers not taken generous profit margins.
Taking average UK petrol pump prices over the past year and stripping out the tax and wholesale cost (backdated two weeks to allow changes to reach the pumps fully) leaves a supplier/retailer margin that tracks like this – the dates are in order of most recent first
A statement from the motoring group said: ‘Once the lockdown is over, the coronavirus beaten, and the UK has returned to normal, questions will have to be asked as to why some forecourts did not charge a fair price for petrol?
‘And why a tank of petrol in one of the most rural parts of the UK averaged £3.50 cheaper than in the most populous region?’
It went on to blast fuel businesses for not passing on the savings at a time when the country needs them most.
Luke Bosdet, the AA’s fuel price spokesman, said: ‘Those representing the retailers say that pump prices need to stay high in the lockdown to compensate for lower sales volumes and avoid forecourt closures.
‘We can only hope that, in the same way the AA has rescued free of charge 1,500 NHS workers whose cars have broken down during the coronavirus crisis and other motoring businesses have supported the emergency services either gratis or at cost, some forecourt owners with over-priced fuel offered a discount to those working to protect them.’
On Monday, the price of oil in the US crashed into negative for the first time in history due to demand drying up amid the Covid-19 pandemic.
The cost to have a barrel of US crude delivered in May plummeted to negative $37.63. At the start of the year, a barrel was roughly priced at $60.
The drop came because US oil traders are expected to run out of places to store the oil within the next two weeks, meaning they are now paying buyers who have space to take barrels off their hands.
The price of Brent crude, the international oil benchmark, also suffered heavy losses but remained above $20 per barrel because it is less affected by storage issues.
Oil prices traded in negative territory for the first time as the spread of COVID-19 impacts global demand
International oil demand has dropped significantly in recent weeks, while Saudi Arabia ramped up production after a falling out with Russia.
Although Saudi Arabia and the rest of oil producing cartel Opec has now committed to slashing production again, these cuts have yet to make an impact on a market flooded by oil.
However, the collapse is unlikely to lead directly to significant discounts for drivers at the pumps.
The price of Brent crude to be delivered in June was only down 10 per cent at 25.63 dollars per barrel.
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