Drivers hit by retailers making ‘unfairly high margins’ on fuel, minister warned

Drivers are suffering from “unfairly high margins” on fuel sales, a Cabinet minister has been warned.

The Competition and Markets Authority (CMA) must be given the power to take “meaningful action” against companies charging too much for petrol and diesel, according to a letter from the RAC to Energy Secretary Claire Coutinho.

The average retailer margin – the difference between the amount they pay for fuel and the pump price – has been above 18p per litre for diesel since May 7 and is nearly 12p per litre for petrol, RAC head of policy Simon Williams wrote.

The long-term average for both fuels is 8p.

Margins have risen in recent days on the back of wholesale costs reducing due to a drop in oil prices.

Margins

The RAC believes if retailers charged “fairer” margins, the average price of a litre of petrol and diesel would be around 145p, down from the current prices of 150p per litre for petrol and 157p per litre for diesel.

Mr Williams wrote: “The RAC recognises that retailers, along with all businesses, have been affected by high levels of inflation, but we feel that current margins are extremely unfair on drivers struggling to get by in the cost-of-living crisis.

“In addition, having tracked fuel prices against the Consumer Prices Index, we can see there is a clear link between the two, meaning unfairly high margins are making inflation higher than it should be.”

He went on: “Even though there has never been more fuel price data publicly available, the issue of excessively high retailer margins persists.

“The RAC believes this will only be improved if the CMA as the price monitoring body is able to take meaningful action against retailers whose margins appear unreasonable when looked at alongside the price of wholesale fuel.”

Fourteen of the biggest fuel retailers are voluntarily sharing daily price data through a CMA scheme.

The Government has proposed a mandatory Pump Watch fuel price transparency programme.