Petrol retailers should cut price by 5p a litre, RAC says

Petrol prices should be cut by 5p a litre by the biggest fuel retailers to reflect their lower wholesale costs, the RAC has said.

The motoring body also says that drivers have not yet felt the benefits of the government's 5p duty cut brought in last year.

The price of oil spiked after Russia invaded Ukraine last year which lead to higher prices at the pumps for drivers.

But wholesale oil prices are now lower, with price per barrel nearly $20 less.

The RAC said the big four supermarkets were making the most profits from petrol - an average of 16p for every litre of unleaded fuel sold in October, and 12p for every litre of diesel. It also said the profit on unleaded was double the average the supermarkets had been making since 2012. In response, Asda told the BBC its prices were around 4p per litre cheaper than the UK average; Tesco, Sainsburys and Morrisons didn't comment.

Supermarkets have recently come under fire for their petrol pricing following an investigation by the Competition and Markets Authority (CMA).

Fuel duty was cut by Chancellor Jeremy Hunt last March, but there were concerns it was not immediately reflected through lower pump prices.

The investigation found the cut had been passed on, but the CMA said increased profit margins cancelled out the benefit.

The watchdog found that weak competition meant supermarket margins on fuel had increased, resulting in extra costs for drivers. As a result, retailers agreed to set up a scheme to allow motorists to compare live fuel prices online.

Ukraine-Russia war pushing up prices

Oil prices jumped following Russia's invasion of Ukraine, with Brent crude hitting more than $120 a barrel in June 2022.

Following that peak, oil prices fell back to a little above $70 a barrel in March this year amid concerns over weak demand.

However, recent months have seen oil prices climb again to around $90 a barrel as major oil producers like Saudi Arabia and Russia started to restrict output.

Despite this, wholesale prices still remain lower than last summer and this is why the RAC is calling on retailers to reflect the lower prices at the pumps.

RAC fuel spokesman Simon Williams said: "Drivers are still losing out massively when wholesale prices come down. But in Northern Ireland, where the supermarkets don't dominate fuel retailing, drivers are getting a fairer deal with a litre of unleaded costing 150p and diesel 157p - 5p less than the UK average."