PRA hits back at suggestion sector ‘holding back’ on fuel duty cut

The Petrol Retailers Association (PRA) has criticised Transport Secretary, Grant Shapps, after he urged drivers to boycott petrol stations who refuse to cut prices.

The Chancellor announced a 5 pence per litre (ppl) cut in fuel duty from 6pm on Wednesday, March 23, in the Spring Statement.

Asked what his message was to petrol stations refusing to cut their prices, Shapps said they should “pass this on”.

He added: “Shop around so that they learn if they don’t pass this on, then they are going to lose business.”

In the letter to Shapps, the PRA explained that the average dealer forecourt would be unable to pass on the fuel duty cut to consumers immediately, as they first have to deplete their existing stock which was purchased before the cut took effect.

The PRA says it also wrote to the Chancellor ahead of the Spring Statement highlighting this point, and that a 5ppl fuel duty reduction would not be substantial enough to reduce the price burden on consumers.

It had suggested the Chancellor backdate the cut to March 1, so smaller retailers could sell their existing stock without the added duty, allowing them to immediately pass on the cut.

Gordon Balmer, director of the PRA, explained: “The PRA understands why motorists are frustrated with high fuel prices. The Government should have established in their announcement that any cut in fuel duty wouldn’t be immediately reflected in pump prices.

“Over the last few weeks, our members have been pricing fuel competitively despite market volatility. Many members are making negative margins, particularly on diesel.”

Balmer added: “Smaller, independent forecourts operate as an integral part of local communities, often knowing customers personally. Their smaller volumes mean they are forced to respond to volatile market conditions to continue operations.

“We urge the Government to acknowledge the constraints under which our members have to operate and that they do endeavour to price fuel responsibly.”

Since March 23, the average price for a litre of petrol has fallen by 3.71p to 163.30p per litre, while diesel has fallen 2.79p to 177.11p. 

Supermarkets – Tesco, Sainsbury's, Asda and Morrisons – have cut duty in full, while Shell and BP have also brought in the cut in petrol stations that they own - but many of their branded forecourts are franchised, with prices set by franchisees.

Shell owns and operates about half of its 1,000 branded UK stations, while BP owns about 300 of its 1,200 stations.