Drivers continue to get a raw deal at the pumps despite prices falling slightly in May

Fuel prices fell slightly in May but drivers are still yet to get a fair deal at the pumps, given wholesale fuel costs have been falling for more than a month, analysis of RAC Fuel Watch* shows.

The average cost of a litre of unleaded finally dropped by 2.4p last month, from 150.31p to 147.88p, saving drivers around £1.30 a tank, with the reduction at supermarkets smaller at just 1.2p (147.31p to 146.15p). Average diesel prices dipped further by 4.5p, from 158.06p to 153.58p, although again supermarkets cut by less at 3.4p a litre, from 154.93p to 151.49p.

Data from the RAC confirms that pump prices should be reduced to a much greater extent as currently there is a huge disparity between wholesale prices – those retailers pay to buy the fuel, which have been falling since late April – and what drivers are charged at forecourts. Retailers are persistently taking far higher margins than they have done historically with those on petrol currently at the 13p mark and diesel even higher at 16p, despite the long-term margin on both fuels being around 8p per litre.

The RAC’s analysis of data provided to the Competition and Markets Authority (CMA) also found that Asda, the supermarket that for a long time prided itself on selling the cheapest fuel, is no longer the most affordable retailer. Instead, the other three supermarkets that make up the ‘big four’ – Tesco, Morrisons and Sainsburys – are selling petrol for an average of 2.1p less per litre (145.25p per litre, compared to Asda at 147.38p) and diesel for 2.5p less (150.45p per litre, compared to Asda at 152.98p).

Once again, the lowest and fairest average UK fuel prices by far are to be found in Northern Ireland where a litre of petrol retails for just 141.4p (5.7p less than the rest of the UK) and diesel at 142.5p (9.9p less than the rest of the UK). However, at a tiny number of forecourts elsewhere in the UK there are also better deals to be had. The cheapest petrol is currently on sale at under 139p a litre at locations in Bishop Auckland in County Durham and St Leonards-on-Sea in East Sussex, and diesel at under 143p a litre in Arbroath in Scotland.

The RAC hopes the CMA’s new powers mean unfair pricing practices that see drivers charged more than they should be are finally stamped out, something that is even more important given motorists are still meant to be benefiting from a 5p a litre duty cut.

RAC senior policy officer Rod Dennis said:

“A month of decreasing fuel prices should be seen as a good one for drivers, but the sheer time it is taking for any meaningful price reductions to reach forecourts is if anything a continuing cause of concern. When it comes to much-needed pump price cuts, it’s sadly a case of too little, too leisurely, with most drivers still getting a miserable deal every time they fill up.

“We’re once again in classic ‘rocket and feather’ territory, with pump prices only trickling down when they should really be falling like a stone. What’s more, not only have wholesale prices been coming down consistently for over a month, but the average margins taken by retailers are still so much bigger than in the past. This means pump prices are at levels much higher than we ought to be seeing, which is all the more concerning given drivers are meant to still be benefiting from a 5p a litre duty cut introduced more than two years ago.

“It’s also interesting to see that Asda no longer holds the crown for selling the cheapest fuel, despite the pledge made when it was subject to a merger a year ago.** The other three major supermarkets, as well as some enterprising independents, now offer lower prices. But with only a few exceptions, there doesn’t appear to be much in the way of price competition taking place.

“The CMA now has the powers it needs to take a closer look at what’s going on across the country when it comes to fuel retailing. In the short term, this should mean greater visibility of pump prices for drivers – and the far fairer prices that those in Northern Ireland continue to enjoy. But crucially, it should also mean it can identify occasions where wholesale price drops aren’t being properly reflected at the pumps, something our analysis shows is sadly still happening.

“What’s more, whichever party takes power after next month’s General Election will have the prickly job of deciding what to do about the supposedly temporary cut in fuel duty. Looking at the UK’s current pump prices, it’s easy to forget this cut is meant to ease the cost of refuelling right now. As a result of the energy price crisis, many governments across Europe have since increased their duty rates again after previously helping drivers. Yet in the UK, diesel prices are still higher than anywhere else on the continent and petrol prices are still among the top-10 most expensive.”

The law that gives the CMA the powers it needs to scrutinise road fuel prices and report any malpractice to the Government took effect on 24 May 2024. The RAC believes that if the biggest retailers were to charge fairer margins, it would lead to:

• Fuel prices across the UK mainland coming down to match those charged in Northern Ireland which are consistently lower
• An end to the postcode lottery which can see individual retailers charging wildly different prices at the forecourts they operate
• An end to ‘rocket and feather’ pricing which results in prices on the forecourt going up far more quickly in a rising wholesale market than they come down when wholesale costs fall
• Those driving diesel vehicles not being consistently overcharged. This is borne from retailers upping margins on diesel to subsidise the price of petrol

The RAC’s analysis of supermarket prices shows that the differences between the cheapest and most expensive fuel charged by individual brands ranges from 8p a litre to 40p:

Fuel prices around the UK

Motorists looking to save money on their fill-ups should take advantage of the fuel finder feature in the free myRAC app. The app can be downloaded for free from the App Store or Google Play.

Up to nine searches a day can be made over a two, five or 10-mile radius, with each giving the five cheapest prices.

The online RAC Fuel Watch resource has more information about the average price of petrol and diesel at the big four supermarkets and at motorway services. It also features graphs showing average prices since 2000 as well as a daily financial breakdown of the cost of a litre of petrol and diesel.