The RAC has told fuel retailers they “must” cut the price of petrol and diesel this week or “risk losing all credibility with drivers”. The motoring organisation says recent reductions in the price of oil need to be passed on to consumers, who are currently experiencing high prices at UK petrol stations.

According to the RAC, oil prices fell $10 a barrel to $73.18 (around £55) on Friday, November 26, but prices remain at very high levels. The RAC’s Fuel Watch initiative puts the average litre of unleaded at 147.64p, while the average litre of diesel costs 150.85p.

But the company estimates these values are too high. Instead, the RAC reckons petrol should cost 12p per litre less than retailers are currently charging, while diesel prices are an estimated 10p a litre over the odds. With those savings applied, petrol would cost around 135p per litre, while diesel prices would fall to 141p per litre.

Hand holding fuel pump and refilling car at petrol station

Instead, the RAC says retailers have been using a “rocket-and-feather” approach to pricing, which sees prices rise rapidly when the oil price increases, but fall slowly when the oil price is cut. RAC fuel spokesman Simon Williams said retailers’ pricing policies should be subject to “government scrutiny” if they refuse to make “substantial” cuts in forecourt prices.

“Sadly, the biggest retailers, who lead the market, have stood strong and taken advantage of their customers by collecting bigger profits on every litre they sell than they traditionally do,” he said.

“On Friday, news of the Omicron Covid variant caused $10 to be shaved off the oil price leading to a further drop in the wholesale price of fuel. We estimate that retailers are now making around 19p a litre which is shocking when you consider their average margin pre-Covid was 6p. The profit on diesel is around 15p a litre with a similar long-term average margin to petrol. Based on the fact the biggest retailers buy new supply every week we believe unleaded is 12p too expensive and diesel about 10p too dear.

“While retailers might resent the RAC pointing out that their fuel is overpriced, this doesn’t change the fact that they should cut. And if they don’t, we feel they will lose credibility with drivers, although it’s very difficult for motorists to vote with their feet because they have nowhere else to go.

“If a substantial cut doesn’t materialise, we feel this is worthy of government scrutiny as there’s no public body monitoring fuel prices to see if they’re fair. With fuel prices at record highs drivers are in dire need of some respite at the pumps and now it’s impossible to blame the prices on rising oil costs. It seems as though retailers think they can get away with charging more for fuel because of the public’s general acceptance of rising energy prices.”

Woman refuelling at petrol station