Petrol prices are back on the rise, according to the AA

Drivers are being hit by rising fuel prices after an increase in oil costs, the AA has warned today.

The average price of a litre of petrol at UK forecourts on Monday was 148.8p, figures from data company Experian show. 

That was marginally up from 148.4p a week earlier, though remains considerably lower than the record high of 191.5p in July 2022.

It comes after the RAC reported that UK retailers pocketed additional profits of 5p on every litre of fuel sold in 2022 and claimed there is ‘absolutely no justification for pump prices to rise’ in the coming days despite recent wholesale increases.

Have falling petrol prices bottomed out? The AA says the average UK price of a litre of unleaded on Monday was 0.4p higher than it was a week earlier

The forecourt rises come after an $8-to-$10 increase in the cost of oil this month, which has pushed the wholesale price of petrol and diesel higher. 

Oil had dropped below $78 (£63.33) a barrel at the start of January but was valued at $86 to $88 (£69.83-£71.45) last week.

The resulting increase fuelled rises in the wholesale cost of road fuel. 

Petrol had bottomed out at 49.2p a litre on 8 December but stood at 62.7p at the end of last week. Diesel, which had cost 66.4p at around the same time last month, reached 71.9p a litre on Friday.

The AA reports that oil prices have already fallen back in recent days, dragging wholesale prices with it.

However, retailers who have bought while prices were higher have already reflected the increase at the pumps.

AA fuel price spokesman Luke Bosdet said: ‘After a fall of close to 43p a litre since the summer record, drivers feared that a rebound in petrol prices would eventually happen.

‘So far, pump price averages have risen only slightly.

‘But today’s price is only 0.9p below the average price at the start of the Ukraine war on February 24 when pump prices surged.’

Diesel averaged 170.4p a litre on Monday, having fallen to 170.3p on Wednesday and Thursday last week. This is almost 29p lower than the record of 199.1p seen last July.

RAC fuel spokesman Simon Williams said that the slight rise in the average price of petrol this week ‘has been caused by smaller retailers passing on increased costs when they’ve bought in new supply’ in the latter part of the month.

He said there is currently no indication that the supermarkets – which buy large quantities of fuel supplies less often – have upped their prices. 

‘We hope this will remain the case, but drivers are likely to see pump prices rise gradually this year as oil is predicted to go up due to growing demand from China as it reopens after its Covid restrictions.

‘But while the price of petrol has clearly bottomed out, diesel is still too expensive based on its wholesale cost,’ he said.

While fuel prices have been dropping over the last few months, both the AA and RAC have said that retailers have not been passing on wholesale savings to Britain’s drivers quickly enough.

An ongoing investigation being conducted by the Competition and Markets Authority said in a December update that it had found evidence of drivers being victim to ‘rocket and feather’ pricing – when pump prices quickly reflect rising wholesale costs but are slow to fall when costs drop – during 2022.

The competitions watchdog is currently undertaking an investigation into the fuel retail sector having found evidence of ‘rocket and feather’ pricing in 2022

A recent RAC study calculated that motorists were being ripped off at the pumps last year by retailers refusing to pass on the full extent of wholesale fuel cost savings and pocketed an extra 5p in profit from every litre of petrol sold.

The analysis found that the average retailer margin on unleaded in 2022 was 13.5p a litre (supermarkets 10.8p) – significantly higher than the 8.7p it was the 12 months previous (supermarkets 5.8p).

The average diesel margin was 10.3p (supermarkets 7.5p), up from 8.8p in 2021 (supermarkets 6p).

Prior to the pandemic, in 2019 average margins were just 6.5p for petrol and 6.9p for diesel, the RAC said.

How YOU can cut your fuel bills: Our top 10 hypermiling tips that will help you use less petrol and diesel and save money 

With petrol and diesel prices showing no sign of dramatically falling anytime soon, filling up at forecourts is set to be a strain on finances in 2023.

That’s why learning ‘hypermiling’ techniques will benefit all drivers.

This is the name given to a series of energy efficient measures motorists can put into practice to save petrol, diesel or electricity (if you own an EV). 

> Read our top 10 hypermiling tips

While the motoring group said it will provide its report to the CMA to enhance its investigation into the fuel sector, it also warned drivers to brace themselves for retailers to hike pump prices soon.

The RAC claimed the gradual price reductions seen across UK forecourts in recent months have now ‘ground to a halt’ as a result of wholesale costs starting to rise last week.

Simon Williams said the analysis found ‘absolutely no justification for pump prices to rise’ in the coming days based on the current wholesale cost of fuel.

Last week it was reported that ministers are examining plans for a fuel watchdog to prevent drivers from being ripped off at the pumps.

Chancellor Jeremy Hunt and Business Secretary Grant Shapps are said to be looking at a system to make petrol and diesel retailers pass on cuts in wholesale costs to consumers.

A report into the situation is expected to be completed by the end of February and a decision made as soon as the March Budget.

Campaigners have called for an initial voluntary system but believe powers including the ability to name and shame garages ripping off drivers could be brought in if retailers fail to take action.

The RAC’s Simon Williams added: ‘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 clear correlation between high fuel prices and higher levels of inflation.’

Official fuel consumption statistics, released by HMRC on Tuesday, show that UK petrol consumption remains at around 1.35billion litres a month, having been just above 1.4bn litres pre-pandemic. 

In 2019, the UK consumed 16.851bn litres of petrol but last year got through 16.116bn litres. In 2020, consumption fell as low as 13.097bn litres.

Likewise, diesel consumption had been 30.035bn litres in 2019 but last year stood at 29.144bn litres. In 2020, the pandemic pushed demand down to 25.029 bn litres.

This post first appeared on Dailymail.co.uk