Over a nine-week period between mid-October and mid-December 2022, wholesale petrol costs fell by 23p per litre, but average pump prices fell by only 18p, after peaking at 166.54p at the end of October. This was largely due to supermarkets not cutting their prices far enough or quickly enough – they only cut their prices by 20p during this period.

Unfortunately, the situation for diesel-powered vehicle drivers was far worse. Over eight weeks, wholesale prices fell by 32p per litre, but average pump prices fell by only 20p per litre, after most recently peaking at 190.41p per litre at the end of October.* Average supermarket diesel pump prices fell by the same amount.

According to RAC data, forecourt price reductions came to a halt this week as wholesale prices began to slowly rise again, bringing retailer margins back to more normal, fairer levels. The concern now is that retailers will rush back to raise pump prices despite the lack of justification.

Retailers make more money from drivers for every litre they sell by not fully reflecting wholesale price drops and keeping pump prices artificially high. According to RAC data, the average retailer margin on gasoline in 2022 will be 13.5p per litre (supermarkets 10.8p), up from 8.7p in 2021. (supermarkets 5.8p). Last year, the average diesel margin was 10.3p (supermarkets 7.5p), up from 8.8p in 2021. (supermarkets 6p). Prior to the pandemic, average retailer margins for petrol were 6.5p and 6.9p for diesel in 2019.

Simon Williams, a spokesman for the RAC, stated:

“Our data show that when wholesale prices rise, pump prices follow suit. However, when wholesale prices fall, forecourt prices fall much more slowly. This is the ‘feather’ part of what is commonly referred to as ‘rocket and feather’ pricing.

“While wholesale fuel prices began to fall in the middle of October last year, it took weeks for supermarkets – which dominate fuel retailing in the UK and, as a result, buy new supplies on a regular basis – to begin seriously cutting prices. Furthermore, they were not only slow to pass on wholesale price reductions, cutting prices by less than 2p per week over three months, but they also did not go far enough, particularly when it came to lowering 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 will begin to raise their prices. This will depend on whether they decide to keep the higher margins or allow them to return to more normal levels. Certainly, based on current wholesale costs, there is no justification for pump prices to rise. If gas prices rise in the coming days, it will be yet another example of the largest 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. Given that the Competition and Markets Authority is currently investigating retail fuel pricing and has even acknowledged the presence of ‘rocket and feather’ pricing, now is the time to act for the benefit of consumers and businesses.”