HomeBusinessFuel retailers defend high costs at UK pumps after drop in oil prices
Fuel retailers defend high costs at UK pumps after drop in oil prices
March 22, 2022
Fuel retailers have dismissed accusations that they have been slow to reduce prices at the pump to reflect a recent fall in their own wholesale costs, as petrol and diesel hit new records on UK forecourts.
The chancellor, Rishi Sunak, is under pressure to cut fuel duty during his spring statement on Wednesday, at which the rising cost of living is likely to take centre stage.
In the latest squeeze on household budgets, petrol hit a new high of 167p per litre on Sunday, while diesel reached 179p, according to figures from Experian Catalist.
Oil prices had soared in recent weeks after Russia’s invasion of Ukraine but have since eased somewhat, prompting the AA to accuse fuel retailers of dragging their feet on passing on the reduction.
“Wholesale petrol and diesel costs started to fall away dramatically on 9 March, yet more than 10 days later prices at the pumps continue to set new records,” said Luke Bosdet, an AA spokesperson.
“Even with oil rebounding to $110 a barrel at the end of last week, wholesale petrol on Friday was down 12p a litre on the 8 March peak.”
However, Gordon Balmer, the executive director of the Petrol Retailers Association (PRA), which represents independent forecourt owners, said the criticism was unfair because wholesale markets for petrol and diesel had fluctuated, rather than falling in line with the declining oil price.
“The market is all over the place at the moment, it’s so volatile,” he said. “We’re not ripping the public off.”
He said fuel retailers were making very little margin on diesel, if any, because high wholesale costs were not being fully passed on at the pump.
While Sunak is under pressure to cut fuel duty, experts argue such a measure could disproportionately aid wealthier people, pointing to research looking at the impact of such moves in the European Union.
EU fuel duty cuts will cost European taxpayers €9bn (£7.5bn), according to analysis by the campaign group Transport & Environment shared with the Guardian. It showed the wealthiest households would gain the most, because they were more likely to drive more and to own larger cars that consume more petrol or diesel.
The richest 10% of EU households spent eight times more on fuel than the bottom 10%, with the UK exhibiting a similar divide, they said.
Griffin Carpenter, a cars analyst at T&E, said: “EU governments claim they stand with Ukraine, but instead of taxing Russian oil, they’re subsidising it with €9bn of taxpayers’ money.
“There are better ways governments can help people. We could impose a tariff or tax on Russian oil imports right now.
“Instead of subsidising the wealthy drivers of gas-guzzling cars, cash support could be distributed more fairly to families who actually need it.”