UK fuel prices fell dramatically during the dying weeks of 2022, according to new figures, but the RAC says the reductions should have been greater. The RAC data comes despite a Competition and Markets Authority (CMA) investigation into the pricing practices of the UK’s fuel retailers.
The RAC’s Fuel Watch initiative showed average UK petrol prices fell by a massive 18p per litre over a nine-week period between mid-October and mid-December last year. That would normally be welcome news for motorists, but the organisation says the wholesale cost – the amount retailers pay to buy in fuel – of petrol fell by 23p per litre in the same period.
Such figures, the RAC claims, are evidence of so-called “rocket-and-feather” pricing that sees forecourt prices shoot up the moment the wholesale price rises, but fall more slowly when the wholesale price is reduced. The practice is already under investigation by the CMA, which was asked to step in by the government amid concerns the 5p-per-litre cut in Fuel Duty was not being passed on to consumers.
According to the Fuel Watch data, drivers of diesel vehicles are suffering more than drivers of petrol cars, despite average forecourt fuel prices falling by 20p per litre during the nine weeks from mid-October to mid-December. However, the RAC’s data also shows the wholesale price fell by a more significant 32p per litre over the same period.
“Our data shows that when wholesale prices increase, pump prices tend to rise very soon afterwards,” said the RAC’s fuel spokesperson Simon Williams. “Yet, when wholesale prices fall it takes far longer for forecourt prices to come down. This is the ‘feather’ element of what’s commonly known as ‘rocket and feather’ pricing.
“Wholesale fuel prices plummeted from the middle of October last year, yet supermarkets – which dominate fuel retailing in the UK and as a result buy new supplies very frequently – took weeks to begin cutting prices in a serious way. What’s more, not only were they slow to pass on wholesale price reductions, cutting prices by less than 2p a week over the course of three months, they also didn’t go far enough, especially when it came to reducing the price of diesel on their forecourts.
“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. Certainly, looking at current wholesale costs there is absolutely no justification for pump prices to rise. If pump prices do rise in the coming days, this will be further evidence of the biggest retailers taking advantage of motorists.
“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 a clear correlation between high fuel prices and higher levels of inflation. As the Competition and Markets Authority is currently looking into retail fuel pricing and has even acknowledged the presence of ‘rocket-and-feather’ pricing, this is the prime time to take action for the benefit of consumers and businesses.”