Petrol and diesel giants accused of not passing on full 5p fuel duty cut to motorists

Many drivers fear forecourts will continue to drain their finances, as Consumer Editor Chris Choi reports

As fuel prices continue to rise on UK petrol forecourts, a leading motoring group says retailers have increased their margins, meaning drivers are not benefitting as much from the cut in fuel duty as was intended.

Chancellor Rishi Sunak had implemented a 5p per litre cut in fuel duty on March 23 to help cash-strapped motorists.

But the RAC said retailers are taking an average profit of 2p per litre more than before the policy was introduced.

The firm’s analysis showed the average margin for a litre of petrol and diesel is currently 11p and 8p respectively - in the month up to the duty cut it was 9p for petrol and 6p for diesel.

The RAC says that means March's cut in fuel duty hasn't had the benefit government promised.

As diesel prices hit a new high, the pressure on Downing Street to make fuel giants pass tax cuts on to motorists has increased.

Business Secretary Kwasi Kwarteng will now write to the industry “to remind them of their responsibilities” following claims retailers hiked profits following the 5p per litre fuel duty cut.

Figures from the Department for Business, Energy and Industrial Strategy show the average price of a litre of diesel at UK forecourts was 179.7p on Monday.

That was up from 178.4p a week earlier.

The average price of petrol on Monday was 165.1p per litre.

That was narrowly below the record of 165.4p set on March 21, based on the government’s figures.

Separate fuel price statistics by data firm Experian Catalist using a different methodology show average prices on Monday were 180.3p per litre for diesel and 166.8p per litre for petrol.

However, a fuel retailers' spokesperson said rising oil prices mean that they cannot pass the entire 5p on without losing out.

Gordon Balmer, executive director of the Petrol Retailers Association, which represents independent forecourts, said comparing pump prices with wholesale prices “only gives a partial picture”.

Once “additional expenses” such as storage and delivery costs are taken into account alongside the “volatility of product prices”, retailers’ margins are “often not enough to cover operating costs”, he added.

“Five pence per litre did not represent a substantial enough cut to ease the burden of rising prices on motorists.

“While the chancellor was announcing it, oil prices rose and effectively cancelled out the reduction.

“In addition to this, sales volumes of petrol and diesel are still not back to their pre-pandemic levels.

“Supermarkets and independent fuel retailers are competing vigorously with each other on the thinnest of margins.”

A spokesperson for the prime minister said: “The public rightly expect retailers and others in the supply chain to pass on the fuel duty cut at the forecourts. It’s the biggest cut ever on all fuel duty rates and can mean big savings for families.

“We know that a number of retailers – big supermarkets, Asda, Tesco and Sainsbury’s – are passing on the cuts and we will raise this with other petrol retailers.

“The business secretary will be writing to the industry again to remind them of their responsibilities here so they should be in no doubt about the need to make sure that everyone is passing on these cuts on the forecourt.”

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