UK petrol prices finally fell in December after months of consecutive increases, according to new data from the RAC. The motoring organisation’s Fuel Watch initiative found the average price of unleaded petrol fell by 2p last month, but the RAC has accused petrol retailers of “not playing fair”.

The figures show the average litre of petrol cost 145.48p per litre at the end of December, having started the month at 147.47p per litre. Diesel prices, meanwhile, fell from 150.8p per litre to 148.92p per litre over the course of the month.

But prices vary depending on where consumers go, and the RAC’s analysis showed Asda and Sainsbury’s had the lowest average petrol prices of 141.81p and 142.57p per litre respectively. Motorists in Northern Ireland also saw lower prices than the rest of the UK, with an average unleaded price of 144.52p per litre across the country.

Sainsbury's petrol station in Preston Lancashire UK

However, the RAC says prices should have been even lower. According to the organisation, the average price of petrol on the wholesale market (from which retailers buy the fuel before selling it on to consumers) was 106p per litre including delivery throughout the month of December. Had retailers taken their usual 6p-per-litre profit margin, the RAC says the average litre of petrol should have cost consumers 135p after applying VAT. For diesel, the RAC says the pump price should have been 142p per litre.

That price difference means filling a typical family car’s 55-litre fuel tank with unleaded cost an average £80 at the end of last month, when the RAC says it should have cost £74. And by the same reasoning, the RAC claims a typical tank of diesel was £4 more expensive than it should have been at the end of December. In total, the organisation estimates this over-pricing cost petrol car drivers £156 million in December – the equivalent of £5 million a day.

Motorists fuelling up at petrol station in Blackburn Lancashire UK

“December was a rotten month for drivers as they were taken advantage of by retailers who rewrote their pump price strategy, costing motorists millions of pounds as a result,” said RAC fuel spokesman Simon Williams. “Their resistance to cutting prices and to only pass on a fraction of the savings they were making from lower wholesale costs is nothing short of scandalous. The 10p extra retailers have added to their long-term margin of 6p a litre has led to petrol car drivers paying £5 million more a day than they previously would have.

“In the past when wholesale prices have dropped retailers have always done the right thing – eventually – and reduced their pump prices. This time they’ve stood strong, taking advantage of all the media talk about ‘higher energy prices’ and banked on the oil price rising again and catching up with their artificially inflated prices, which it has now done.

Woman motorist filling car at petrol station

“The trouble is every extra penny they take as margin leads to drivers paying even more as VAT gets added on top at the end of the forecourt transaction. This means the Treasury’s coffers have been substantially boosted on the back of the retailers’ action. We urge ministers to push retailers into doing the right thing for consumers.”

But the Petrol Retailers Association, which represents independent petrol stations, said the figures were slightly misleading because the figures were taken from fuel card data. The organisation’s executive director, Gordon Balmer, also said the costs of running a petrol station were rising and the reduction in demand caused by the pandemic also meant retailers had to raise prices slightly.

Woman filling her car at a petrol station

“December’s pump price data is less reliable because it is taken from fuel card transactions, and there have been far fewer of these transactions because of the reduction in business activity between Christmas and New Year,” he said. “With pump prices falling towards the end of the month, car drivers travelling over the holiday period are likely to have benefited more than these figures suggest.

“While the retail fuel market remains extremely competitive, supermarkets did not use artificially low fuel prices to lure shoppers into their stores at Christmas. The costs of running petrol stations rose all year, with electricity up 19 percent, while vastly reduced margins from fuel cards, increased national insurance and wage inflation.

“The latest volume figures as supplied by BEIS (Business Energy and Industrial Strategy) reveal that for most of December volumes were running at 90 percent of pre-pandemic levels, and for the week ending December 26 they were at 78 percent. When volumes fall and operating costs are rising, it makes sense for fuel retailers to raise margins if they are to remain in business to serve their customers.”