Government urged to intervene over 'unfair' supermarket fuel pricing

The RAC is calling on the Government to intervene with the average supermarket margin on a litre of fuel standing at 13p in December, more than double what it was in 2021.

The average price of petrol across the UK fell by 6 pence per litre (ppl) in December to 146.69p, while diesel also came down by 5ppl to 149.18p

Unleaded is now back to a price last seen in early February 2022 – prior to Russia’s invasion of Ukraine which led to the cost of oil rocketing to around $130. The price of a barrel is now under $80.

However, the RAC argues that pump prices should be lower still if the big four supermarkets were taking smaller margins.

"It’s surely impossible to argue that competition is working properly if prices are so vastly different in two parts of the UK," Simon Williams, RAC

In Northern Ireland, petrol is 5ppl cheaper than the UK average at just 135.28p and diesel is 5ppl less at 144.2p.

Both fuels bought in Northern Ireland are also cheaper than the averages charged at the big four supermarkets – 137.63p for petrol and 145.89p for diesel.

Furthermore, data from the RAC shows that independent forecourt Grindley Brook in Whitchurch, Shropshire, is charging 130.9p for petrol – 7ppl less than their average of 137.63p.

Meanwhile, its diesel price is 139.9p – 6ppl less than the supermarket average of 145.89p.

RAC fuel spokesman Simon Williams said: “While we’re starting the year paying much less at the pumps than we have done, it’s still galling to know that drivers aren’t being charged a fair price in comparison to Northern Ireland where the very same petrol and diesel is at least 5p a litre cheaper.

“It’s surely impossible to argue that competition is working properly if prices are so vastly different in two parts of the UK. And if an independent retailer in the middle of Shropshire can be undercutting the supermarkets by around 6p a litre, something has to be very badly wrong.”

The RAC is calling on the biggest retailers to lower their prices to match those being charged in Northern Ireland.

“We also urge energy security secretary Claire Coutinho, who is on a mission to bring greater transparency to fuel pricing following the Competition and Markets Authority’s investigation concluding drivers were overcharged to the tune of £900m in 2022, to ask the supermarkets why they won’t charge similar prices to the averages seen across Northern Ireland,” added Williams.

RAC data also shows that the delivered wholesale price of petrol is 104p. This means even with a margin of 10p a litre – 3p higher than the long-term margin of 7p –unleaded should be on sale for an average of 137p, instead of 140.6p as it is currently.

The RAC estimates that the supermarkets could be charging around 132p, not their current 137.63p.

Williams said: “In spite of the current overcharging, we strongly hope that 2024 will be the year when drivers finally get to see fairer pump prices.”

The Government announced in November that fuel retailers, including supermarkets, will be forced to reveal how much they are charging customers on their forecourts versus their profits.

Those that fail to comply could face a fixed fine from the watchdog of up to 1% of their worldwide turnover, or an ongoing fine of up to 5% of daily turnover.

It followed a CMA report which found that major fuel retailers were still cashing in on increased margins. 

Supermarket fuel margins, from January to November in 2023, had been higher than previous years on a percentage basis, the CMA report found. 

However, the CMA figures showed that supermarket fuel margins were slightly down on 2022, on a pence per litre basis, due to lower wholesale costs.

Regional pump prices