In a troubling development for motorists across the UK, petrol prices have experienced a sharp increase, with the average cost of petrol now 10 pence per litre higher than at the start of 2024. This has added approximately £5.50 to the cost of filling up a standard car tank, pushing the total to over £80.
Rising Costs and Retailer Profits
The latest data from RAC Fuel Watch indicates that the average price of petrol climbed to 149.95 pence per litre last month, approaching the peak price of £1.50 per litre witnessed in November of the previous year. Similarly, diesel prices have climbed, now costing 157.76 pence per litre, a rise of two pence from the previous month.
Simon Williams from the RAC highlighted the issue of increasing retailer margins as a primary cause for the rise, noting a recent resurgence in profit margins despite earlier regulatory warnings. “The Competition and Markets Authority’s concerns seem to have been ignored, leading to consumers facing significantly higher costs at the pump, especially for diesel,” Williams explained.
Regional Price Variations: A Growing Concern
The disparity in fuel prices across different regions has also been a focal point of concern. It has been reported that fuel prices in Northern Ireland remain consistently five pence cheaper per litre compared to other parts of the UK. Furthermore, there is a considerable variance in pricing among major fuel retailers, with differences as large as 30 pence per litre between the cheapest and most expensive stations.
The Economics Behind Fuel Pricing
The RAC’s analysis has shed light on the composition of petrol pricing, revealing that taxes including fuel duty and VAT constitute 52% of the total cost per litre. With the current average price at 150p per litre, retailers are netting approximately 11.6p per litre, while the government collects nearly 78p in taxes.
This situation is further complicated by what is known as “rocket and feather” pricing, where fuel prices rapidly increase with wholesale prices but decline much more slowly when those costs drop. The RAC advocates for more equitable retailer margins to prevent these abrupt price hikes.
The Impact on Motorists and Calls for Fair Pricing
The relentless rise in fuel prices imposes significant economic strain on UK drivers, many already contending with heightened living costs. The gradual build-up of an extra £5.50 per tank significantly affects those dependent on their vehicles for daily activities. The perception that fuel retailers are ignoring regulatory guidance on profit margins is fostering a sense of exploitation and diminishing trust. This sentiment strains consumer relationships with suppliers and calls into question the efficacy of regulatory bodies to uphold fair market practices.
