Petrol retailers pocketed additional profit last month that will have almost cancelled out Rishi Sunak’s fuel duty cut introduced at the end of March to help motorists facing a cost of living crisis.
Analysis of fuel price data found that retailers’ margins were far higher in April than they were in March, taking around 4p more a litre than they did over the course of the previous month, according to RAC Fuel Watch.
Its latest report said major sellers, which buy fuel most frequently, also failed to pass on lower wholesale prices early in April to ‘protect themselves from future rises’.
While April provided a welcome break from 3 consecutive months of ‘nightmarish’ fuel price rises, the RAC said retailers held savings back from drivers and pocketed additional profit
While retailers failed to pass on the full extent of savings, April did at least end three consecutive months of ‘nightmarish’ fuel price rises and provided some much-needed relief at the pumps.
The average price of petrol dropped by 0.5p-a-litre to 162.75p over the course of April, while diesel remained flat at 177p from the beginning to the end of the month.
The cost of filling a 55-litre family car from empty is 50p less than it was at the start of the month at £89.51, while it costs £97 to brim the tank of an equivalent-size diesel.
The RAC’s Simon Williams said it was ‘very much the case’ that retailers’ margins were far higher in April. He estimates they took around 4p more a litre than they did in March
However, there should have been more significant reductions in-line with lower wholesale costs for retailers, the analysis found.
The RAC’s fuel spokesman Simon Williams said retailers should have been quicker to pass on these savings when their costs dropped at the beginning of April.
‘Instead, the biggest retailers, which buy fuel most frequently, held out and protected themselves from future rises,’ he said.
‘They will no doubt feel they were justified in not lowering their forecourt prices as wholesale costs are now rising again.’
Williams added: ‘It’s also very much the case that retailers’ margins were far higher in April than they were in March.
‘RAC Fuel Watch data estimates they took around 4p more a litre than they did over the course of the previous month.
‘This will surely be a disappointment to the Chancellor who cut fuel duty by 5p a litre in the Spring Statement.’
The wholesale cost of fuel began to rise again later in the month due to oil prices escalating and a decline in value of the pound against the dollar.
While the oil price dropped under $100 three times over the course of the month, the barrel price finished slightly higher than it started April at $108.62 ($107.52 on 1 April).
In an added blow for Britons, the pound fell against the dollar, slipping from $1.3 to $1.25 over the month. With fuel traded in dollars, this also impacted wholesale prices paid by fuel companies.
By the end of April, unleaded prices were 4.5p-a-litre lower than the record petrol high of 167.3p set on 22 March, while diesel is 2.5p below the 179.9p high seen on 23 March.
Prices at motorway service stations remained much higher than the UK average.
Petrol prices at motorway filling stations went up by an average of 0.67p to 182.08p and diesel 0.83p to 192.34p during April, the RAC said.
The AA has warned that fuel prices could jump by around 5p-a-litre in a matter of days after wholesale prices surged at the end of April and retailers will be looking to pass on higher costs
Despite the momentary respite from rising filling costs last month, experts have already warned that drivers need to buckle up in preparation for more price increases at the pumps that could start in just a matter of days.
Earlier this week, the AA warned that petrol and diesel could hit new records within weeks – just in time for the Platinum Jubilee bank holiday getaway in early June.
Its analysis found that wholesale prices surged by 5p a litre last week – a rise which takes two to three weeks to be passed on at the pumps.
It could mean a repeat of the situation seen in March and sparked new record highs at the pumps.
A spokesperson for the AA said: ‘Drivers need to brace themselves for a jump in the cost of petrol.’
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