RAC warns of diesel profiteering despite wholesale price drop

One of the UK’s leading motoring organisations has accused retailers of inflating the price of diesel at the pump, despite wholesale prices of the fuel having fallen below the cost of petrol.

Diesel prices in April averaged 159.4p a litre across the UK, according to the RAC, compared to 146.5p for a litre of petrol. But wholesale prices for diesel at the end of the month stood at 104.9p a litre, well below the 111.2p for petrol.

The RAC research supports wider concerns that UK fuel retailers have been taking advantage of a shift in consumer expectations that diesel would remain at a premium to petrol, despite prices now having fallen back in line with other refined fuels.

Its calculations showed retailer’s average margin on diesel had soared to 22p a litre, more than three times the long-term average, according to Simon Williams of the RAC. “This is hard for them to justify and equally hard for diesel drivers to swallow,” he said.

Diesel price increases outstripped the fast rising cost of crude oil and petrol in 2022 in the wake of Moscow’s full-scale invasion of Ukraine, as Russian refineries were the single largest source of diesel supplies to western Europe at the time.

The RAC’s intervention comes as a probe by the Competition and Markets Authority into retail fuel costs is nearing its conclusion. The regulator is due to publish its findings by July 7.

An earlier report by the CMA found little evidence of problems in the retail fuel market, broadly concluding that high prices last year were a reflection of the war in Ukraine and volatility in global energy markets.

But the RAC has in recent months singled out the impact of supermarket fuel retailers on the wider market for no longer being as competitive on pricing as they once were.

Industry figures said the so-called big four supermarkets — Tesco, Sainsbury’s, Asda and Morrisons — have become less price competitive at the pump because they are facing increased competition selling groceries from cut-price rivals such as Aldi and Lidl.

Asda and Morrisons have also both been bought out by private equity backed investors in recent years, leaving them saddled with significant loans to service.

Tesco, Sainsbury’s, Asda and Morrisons did not respond to a request for comment.

Gordon Balmer, executive director of Petrol Retailer Association, which represents independent fuel stations, said supermarkets represented about 45 per cent of all petrol and diesel sales in the country.

“Due to their market share, supermarkets are price leaders and in many cases our members will use them as markers for pump prices when operating in the same area,” Balmer said. “This dynamic is now shifting.”