Petrol retailers pocketing an extra 5p per litre in profit from drivers

Petrol retailers pocketed an extra 5p on every litre in 2022 as RAC warns pump prices could soon rise again due to increasing wholesale fuel costs

  • Retailers made an additional 5p a litre on petrol margins in 2022, 1.5p on diesel
  • RAC analysis finds evidence of ‘rocket and feather’ pricing at the end of last year 
  • Wholesale fuel increased last week – RAC warns this could be reflected at pumps 

Motorists were ripped off at the pumps in 2022 as retailers refused to pass on the full extent of wholesale fuel costs and pocketed an extra 5p in profit from every litre of petrol sold.

That’s according to new analysis by the RAC, which found that the average retailer margin on unleaded in 2022 was 13.5p a litre (supermarkets 10.8p) – significantly higher than the 8.7p it was the 12 months previous (supermarkets 5.8p). 

The average diesel margin was 10.3p (supermarkets 7.5p), up from 8.8p in 2021 (supermarkets 6p). 

Prior to the pandemic, in 2019 average margins were just 6.5p for petrol and 6.9p for diesel. 

Retailers boosting margins from motorists: RAC says fuel retailers made an additional 5p per litre on petrol profits in 2022 compared to 2021 by refusing to pass on cost savings to drivers

The RAC describes it is a ‘galling situation’ for drivers during the cost of living crunch as retailers make more money out of them by persistently ‘keeping pump prices artificially high’ and warned prices could be back on the rise shortly as wholesale costs have started to creep higher.

Its report says wholesale petrol tumbled by 23p per litre in the nine weeks to 11 December, but average pump prices fell by only 20p a litre in the same period.

The gulf for diesel drivers was more significant, with wholesale costs plummeting 32p per litre in an eight-week spell, while the UK average cost at the pump dropped by just 20p – a 12p difference.

The motoring organisation says this is further evidence of ‘rocket and feather pricing’ just weeks after a watchdog investigation highlighted finding examples of this taking place throughout last year.

The Competition and Markets Authority (CMA) said in December that 2022 been the ‘most volatile’ for fuel pricing since reliable records began, seeing pump costs surge by around 50p a litre from January to July – the largest leap recorded within a year – before falling by 31p for petrol and 14p for diesel.

It said it had found ‘some evidence’ of retailers in the previous 12 months rapidly hiking pump prices in response to increasing wholesale fuel costs – the ‘rocket’ – but then failing to pass on savings when these costs dropped – the ‘feather’.

The CMA’s update today identified that retailers are pocketing bigger margins than they have done previously, as it continues its probe into petrol pricing.

Business Secretary Grant Shapps wrote to fuel retailers on December 22 urging them to ‘ensure savings are passed on to consumers’ after it emerged drivers were being hit by record Christmas getaway fuel prices. 

Bodies representing the fuel sector have defended taking additional margins, saying higher energy costs means forecourts are more expensive to run than they were a year ago. 

Could forecourt prices rise again in the coming days? The RAC warns that the wholesale cost of petrol and diesel crept higher last week, which could soon be reflected at the pumps

Could forecourt prices rise again in the coming days? The RAC warns that the wholesale cost of petrol and diesel crept higher last week, which could soon be reflected at the pumps

‘There is absolutely no justification for pump prices to rise’ on the back of recent wholesale increases

While the RAC said it will provide its report to the CMA to enhance its investigation into the fuel sector, it warned drivers to brace themselves for retailers to hike pump prices soon.

It claimed the gradual price reductions seen across UK forecourts in recent months have now ‘ground to a halt’ as a result of wholesale costs starting to slowly rising again last week.

How YOU can cut your fuel bills: Our top 10 hypermiling tips that will help you use less petrol and diesel and save money 

With petrol and diesel prices showing no sign of dramatically falling anytime soon, filling up at forecourts is set to be a strain on finances in 2023.

That’s why learning ‘hypermiling’ techniques will benefit all drivers.

This is the name given to a series of energy efficient measures motorists can put into practice to save petrol, diesel or electricity (if you own an EV). 

> Read our top 10 hypermiling tips

RAC fuel spokesman Simon Williams said: ‘This is a galling situation for drivers who are struggling more than ever given the impacts of the wider cost-of-living crisis.

‘The question now is whether retailers start to bump up their prices.

‘This will depend on whether they decide to continue enjoying larger margins or let them return to more normal levels.

‘Looking at current wholesale costs there is absolutely no justification for pump prices to rise.’

Last week it was reported that ministers are currently examining plans for a fuel watchdog to prevent drivers from being ripped off at the pumps.

Chancellor Jeremy Hunt and Mr Shapps are said to be looking at a system to make petrol and diesel retailers pass on cuts in wholesale costs to consumers.

A report into the situation is expected to be completed by the end of February and a decision made as soon as the March Budget.

Campaigners have called for an initial voluntary system but believe powers including the ability to name and shame garages ripping off drivers could be brought in if retailers fail to take action.

The RAC’s Simon Williams added: ‘We urge the Government to focus on ensuring retailers quickly pass on savings to drivers every time there is significant downward movement in the wholesale price of fuel – not just to ensure drivers aren’t treated unfairly, but also because there is clear correlation between high fuel prices and higher levels of inflation.’