Fuel retailers are being urged by the RAC to pass on recent reductions in wholesale fuel costs by cutting pump prices by 2p per litre (ppl).
The average price of diesel and petrol increased by 6p per litre in May, the worst monthly rise in at least 18 years, according to RAC Fuel Watch data.
The average price of both petrol and diesel has gone up every single day since 22 April, adding 8p a litre in the process – the longest sustained price increase since March 2015.
However, the Fuel Watch data also shows that despite wholesale prices having dropped by between 2.5-3ppl since May 22, drivers have suffered near-daily fuel prices rises, with the average price of a litre of unleaded standing at 129.42p and diesel at 132.34p.
In the case of diesel, supermarkets have now been raising the price every single day since the March 27 – again despite wholesale prices having come down by around 2.5p since May 24.
RAC spokesperson Rod Dennis said: “Our data shows that it’s high time retailers cut the price of petrol and diesel at the pumps – we see no good reason for them to wait before passing on savings they are benefiting from which have been brought about by falling wholesale prices.”
The fluctuating price motorists pay to fill up at the pumps is determined most significantly by the oil price, and by the sterling to US dollar exchange rate.
While May saw historic increases in the price of petrol – largely as a result of a barrel of oil peaking at $80 and sterling weakening against the dollar – since the latter part of last month the oil price has been falling. This has caused wholesale fuel prices to drop, which means retailers are paying less for petrol and diesel.
Recent falls in the price of oil are a result the United States drilling for more oil than it has done in more than three years, increased output from Russia and ongoing speculation as to whether major oil-producing nations that are members of OPEC (the Organisation of Petroleum Exporting Countries) will choose to end their current policy of restricting oil production at their meeting later this month. The latter has been credited with raising the oil price since historic lows in early 2016.
Dennis said: “Motorists really felt the impact of rising in prices in May, when the cost of filling up a petrol family car jumped by around £3.30 in a single month. We are now well into June, and drivers are still waiting for some relief to rising prices.
“The oil price, together with the sterling/dollar exchange rate, are notoriously volatile which means the price retailers pay when they buy fuel fluctuates regularly. But given how rapidly prices can go up when the wholesale price rises, it is not right that when wholesale prices fall many retailers seem to wait before making a headline-grabbing cut.”
Many of the biggest fuel retailers in the UK buy fuel on a daily basis. “This means that they have been buying in fuel for less than they were just a few weeks’ ago,” continued Dennis. “These price savings should be being passed on to motorists now – making incremental cuts would be fairer.”
The RAC first reported the daily ‘fuel price creep’ in May, as the supermarkets and big fuel retailers increased the price of unleaded and diesel on their forecourts by a fraction of a pence every day.
“If this is their pricing strategy then to be fair to motorists we need to see it work in the same way in the opposite direction – rather than storing up wholesale price savings with no guarantee that motorists will feel the benefit of falling wholesale fuel prices,” said Dennis.
“Depending on what happens in the course of the next fortnight, there remains a risk that the cost of a barrel of oil could go up again. In such an instance the retailers are unlikely to pass on any savings they have banked during this period, but instead will start passing on future increases at the pump.”
Motorists are currently facing the highest fuel prices in more than three and a half years, according to the RAC. The price hike means they are also paying more in VAT on fuel which is now 21.6p per litre on the UK average price for unleaded of 129.42p, on top of the 57.95p per litre which goes to the Treasury in fuel duty.