Fuel prices are once again on the rise due to increasing oil costs and concerns that motorists are not receiving fair prices. According to the AA, a 10-week downward trend in pump prices has come to an end. While average costs have remained consistent with last week’s prices, a growing number of gas stations are raising their prices in response to higher oil and wholesale charges.
In a separate study, the RAC has declared that both petrol and diesel prices are still too expensive, accusing retailers in England, Scotland, and Wales of overcharging customers based on wholesale trends. According to their report, petrol prices should be an average of 4.5p per litre lower, while diesel should be 8p less. The RAC has accused independent retailers of profiteering, but these retailers have countered by stating that increased costs for things like wages and electricity are not taken into account in the RAC’s claims.
To address this issue, a voluntary fuel price transparency scheme has been put in place by the Competition and Markets Authority (CMA) after discovering that supermarkets overcharged drivers by £900 million in 2022. This scheme is expected to be replaced by a statutory Pumpwatch scheme later this year, which will require gas stations to disclose their costs. Modeled after a similar program in Northern Ireland, this initiative is credited with increasing competition and may also give the regulator the power to fine gas stations that overcharge customers. The details of the final scheme will be determined by the next government after Thursday’s general election.
According to the CMA’s transparency scheme, the average petrol price on Monday was 144.5p and diesel was 149.6p. Luke Bosdet, the AA’s fuel price spokesman, stated, “The question is whether, after a significant fall in the UK’s average petrol price in June, the price will repeat last year’s sharp rise going further into the summer. “It would be a blow for the impending summer getaway if the cost of road travel took off again. For now, filling up sooner rather later will take advantage of current lower prices.” Bosdet also noted that the implementation of the statutory fuel price transparency scheme later this year will be a significant benefit for drivers facing these market movements in the future. He also highlighted some shifts in the fuel retailing industry, such as Asda offering supermarket pump prices at non-supermarket gas stations where they have a retail presence and Motor Fuel Group providing discounted fuel at former Morrison supermarket gas stations.
Supermarkets have traditionally been leaders in fuel price costs, often offering discounts to attract shoppers to their stores. However, during the cost of living crisis, these chains have instead focused on lowering prices for household essentials. The RAC’s report claims that the average prices being charged outside of Northern Ireland are not justified by UK wholesale fuel costs. The report also notes that there are significant price differences between supermarkets and Shell and BP-branded gas stations, with the latter typically charging the most.
Simon Williams, the RAC’s head of policy, stated, “We will continue to highlight this disparity, along with the massive differences between major retailers’ high and low prices, to the new government and the Competition and Markets Authority with a view to them being addressed by the new Pumpwatch scheme when it is up and running.”
On Tuesday, data from the London Stock Exchange Group (LSEG) showed that Brent crude oil, the international benchmark, was trading above $87 a barrel – levels last seen at the end of April. Global oil costs have been steadily rising since early June. Some of this increase can be attributed to production cuts by major oil-producing nations in the OPEC+ cartel, which includes Saudi Arabia and Russia. Additionally, the ongoing conflict in the Middle East, disruption to shipping in the Red Sea, and forecasts of rising demand in China have also contributed to the rise in oil prices. Market analysts also attribute the price increase to expectations of a 5% rise in the number of drivers using America’s roads during the peak summer holiday season. Hani Abuagla, senior market analyst at XTB MENA, added, “Furthermore, Hurricane Beryl impacted sentiment, posing a threat to oil production if it shifts toward the Gulf of Mexico. These uncertainties have led to further market volatility.”
