Wholesale prices have been dropping, but the same cannot be said for the prices paid by customers.
Despite wholesale prices meriting big cuts at the pumps the average price of petrol has fallen by just 2p a litre. According to the RAC Fuel Watch  it means drivers paid £156m more than they should have in December.

Unleaded dropped from 147.47p a litre to 145.48p when drivers should really have seen prices nearer to 135p. The RAC is accusing retailers of unfair play.

Diesel dropped by just under 2p a litre from 150.80p to 148.92p when drivers should have been paying around 142p.

Cash giveaway

Usually, the retailer mark-up over the long-term is 6p a litre. However, during December retailers took an average of 16p a litre on petrol and 12.5p on diesel. It makes forecourt prices far more expensive than normally expected from pricing strategy.

The price of a litre of unleaded on the wholesale market, including delivery, averaged 106p across the month. Had a 6p margin been taken, drivers would have seen an average petrol pump price of around 135p after applying VAT at 20%.

The average wholesale cost of delivered diesel was 112p a litre which, with the usual 6p retailer margin, would have given a pump price of around 142p.

It means it’s cost petrol car drivers £6 more to fill up a typical 55-litre family car than it should have (£80 v £74). For diesel it equates to nearly £4 more with a tank costing £82 at the end of the month instead of £78.

Totalling up the costs, the RAC estimates retailers’ refusal to reflect lower wholesale prices cost petrol car drivers a huge £156m in December, or the equivalent of £5m a day.

Bad news

RAC fuel spokesman Simon Williams describes December as “a rotten month for drivers”, and retailers’ actions as “scandalous”.

“In the past when wholesale prices have dropped retailers have always done the right thing –eventually – and reduced their pump prices.

“This time they’ve stood strong, taking advantage of all the media talk about ‘higher energy prices”.

But its not just retailers who benefit, the taxman does to with VAT – adding 20% to every retailer increase. “This means the Treasury’s coffers have been substantially boosted on the back of the retailers’ action. We urge ministers to push retailers into doing the right thing for consumers.

However, on potential benefit is to encourage even more motorists to embrace the electric vehicle (EV). It means that “driving 9,000 miles a year could save around £1,500″.

Supermarket sweet

An analysis of RAC Fuel Watch data reveals Asda had the cheapest petrol at the end of the year with a litre costing an average of 141.81p at their stores, with Sainsbury’s not far behind at 142.57p.

Asda also sold the lowest priced diesel at 144.9p a litre ahead of Tesco on 145.8p. The average price of motorway unleaded at the close of December was 160.55p while diesel was higher still at 163.43p.

Regional pump prices compared

Unleaded 01/12/2021 31/12/2021 Change
UK average 147.47 145.48 -1.99
East 147.95 146.24 -1.71
East Midlands 147.78 145.15 -2.63
London 147.68 145.89 -1.79
North East 146.72 144.84 -1.88
North West 147.47 145.49 -1.98
Northern Ireland 144.52 142.61 -1.91
Scotland 147.01 145.01 -2.00
South East 148.30 146.64 -1.66
South West 147.59 145.50 -2.09
Wales 146.83 144.47 -2.36
West Midlands 147.44 144.92 -2.52
Yorkshire and the Humber 146.62 144.83 -1.79
Diesel 01/12/2021 31/12/2021 Change
UK average 150.80 148.92 -1.88
East 151.41 149.70 -1.71
East Midlands 150.87 148.60 -2.27
London 151.38 149.38 -2.00
North East 150.01 148.24 -1.77
North West 150.61 148.61 -2.00
Northern Ireland 146.42 144.45 -1.97
Scotland 150.81 148.66 -2.15
South East 151.97 150.40 -1.57
South West 151.37 149.20 -2.17
Wales 150.54 148.45 -2.09
West Midlands 150.77 148.73 -2.04
Yorkshire and The Humber 150.49 148.64 -1.85

Find out more about UK petrol and diesel prices here.