In the UK, diesel prices experienced a record decline of 12p per litre on average last month, as reported by the RAC. The cost of filling up a family car decreased by £6.50, with pump prices falling from around £1.59 to £1.47. Since the RAC began monitoring prices in 2000, this reduction marks the largest monthly drop. However, the motoring group claims that the decrease is “both long overdue and smaller than it should be” due to even lower wholesale prices.
The British Retail Consortium, representing supermarkets, stated that “big cuts” had been made to diesel prices in response to the drop in wholesale costs. Diesel prices have now decreased by over 25% from 2022 highs, after falling for seven consecutive months. Following Russia’s invasion of Ukraine, fuel prices reached a high of £1.99 per litre last summer as oil prices skyrocketed. Petrol prices have also consistently fallen since then, dropping from £1.46 to £1.43 on average last month, according to RAC figures.
The RAC suggests that prices have not decreased as quickly or as much as they should have, pointing out that prices were considerably lower in Northern Ireland. The motoring group argues that the cut should have been more substantial to accurately reflect changes in the wholesale market, as diesel wholesale costs had been lower than petrol for ten weeks.
In May, the Competition and Markets Authority (CMA) announced an investigation into fuel prices and whether a “failure in competition” had resulted in drivers overpaying. The watchdog expressed concerns about the “sustained higher margins on diesel compared to petrol” this year. It revealed that evidence gathered so far indicated that at least one supermarket had set a higher target for its profit margin on fuel prices in 2022, potentially leading rivals to follow suit and raise prices as well.
The RAC noted that it seemed “ironic that the latest price cuts have finally come in the two weeks following the Competition and Markets Authority’s announcement.” Mr. Williams added, “What’s happened to the price of diesel in May will no doubt give the CMA something to think about. We strongly hope the pump price reductions continue as they should.”
Gordon Balmer, executive director of the Petrol Retailers Association, which represents thousands of independent forecourts, advised drivers to “shop around.” He stated, “As noted by the CMA, petrol and diesel prices are still volatile due to the ongoing war in Ukraine. The market is very dynamic, and independent forecourts are in many cases undercutting supermarkets on price.”
A separate review of the fuel market has been underway for several months, initially prompted by concerns that retailers and forecourts were not passing on a 5p fuel duty cut to motorists.
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