Pump prices for drivers have remained relatively stable even as the cost for retailers has significantly dropped, according to the latest report from the AA.
The AA revealed that the wholesale price of petrol has decreased to levels not seen since 2021, prior to the conflict between Russia and Ukraine, resulting in a subsequent price surge. This drop in petrol prices is in alignment with the decline in oil prices to below $60 per barrel, the lowest since May, driven by potential peace talks between the two countries and an anticipated oversupply in the oil market next year.
Despite garages experiencing a more than 7p per liter reduction in petrol costs by the end of last week, drivers have not yet benefitted from this decrease, as average pump prices have hardly changed. The national average stood at 137.3p per liter at the beginning of this week, only slightly down from 137.5p at the start of December.
If the full wholesale price reduction had been passed on to consumers, they could have saved approximately £4.60 on filling a standard 55-liter tank, as estimated by the AA.
Similarly, diesel prices at the pump have not reflected the significant drop in wholesale costs, with only a marginal decrease from 146.9p per liter to 146.6p since the start of December.
These developments are occurring as many motorists prepare for holiday travel, potentially missing out on considerable savings due to the delayed adjustment in pump prices.
The AA expressed uncertainty regarding the reasons for the delay in price adjustments this time, refraining from direct criticism of retailers. Luke Bosdet, the AA’s spokesperson for fuel prices, highlighted concerns over the current pricing situation, noting that prices have remained stagnant when they could have decreased.
The Competition and Markets Authority had previously raised concerns about retailers’ profit margins on fuel prices exceeding historical levels, indicating possible exploitation of consumers. The upcoming release of the CMA’s quarterly review is expected to shed further light on this issue, potentially adding more pressure on the industry.
Gordon Balmer, executive director at the Petrol Retailers Association, emphasized that reductions in wholesale fuel prices are gradually being reflected in pump prices ahead of the holiday season.