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Drivers hit by retailers making ‘unfairly high margins’ on fuel, minister warned

Drivers are suffering from “unfairly high margins” on fuel sales, a Cabinet minister has been warned.

The Competition and Markets Authority (CMA) must be given the power to take “meaningful action” against companies charging too much for petrol and diesel, according to a letter from the RAC to Energy Secretary Claire Coutinho.

The average retailer margin – the difference between the amount they pay for fuel and the pump price – has been above 18p per litre for diesel since May 7 and is nearly 12p per litre for petrol, RAC head of policy Simon Williams wrote.

The long-term average for both fuels is 8p.

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Margins have risen in recent days on the back of wholesale costs reducing due to a drop in oil prices.

The RAC believes if retailers charged “fairer” margins, the average price of a litre of petrol and diesel would be around 145p, down from the current prices of 150p per litre for petrol and 157p per litre for diesel.

Mr Williams wrote: “The RAC recognises that retailers, along with all businesses, have been affected by high levels of inflation, but we feel that current margins are extremely unfair on drivers struggling to get by in the cost-of-living crisis.

“In addition, having tracked fuel prices against the Consumer Prices Index, we can see there is a clear link between the two, meaning unfairly high margins are making inflation higher than it should be.”

He went on: “Even though there has never been more fuel price data publicly available, the issue of excessively high retailer margins persists.

“The RAC believes this will only be improved if the CMA as the price monitoring body is able to take meaningful action against retailers whose margins appear unreasonable when looked at alongside the price of wholesale fuel.”

Fourteen of the biggest fuel retailers are voluntarily sharing daily price data through a CMA scheme.

The Government has proposed a mandatory Pump Watch fuel price transparency programme.

A Department for Energy Security and Net Zero spokesperson said: “The Energy Secretary has been clear that retailers who fail to pass on savings to drivers at the pumps will be held to account.

“We are already giving the CMA tough new powers to force retailers to come clean on their prices and call out any rip-off charges.

“Drivers deserve to know they are getting a fair price for fuel and our PumpWatch scheme will do just that, helping them to find the best deal.”

Gordon Balmer, executive director of the Petrol Retailers’ Association, which represents independent fuel sellers, said: “Petrol retailers continue to offer motorists the best deals possible while wrestling with skyrocketing increases to their fixed costs.

“Retailers are having to contend with record levels of theft as well as increases in business rates, energy bills and the National Minimum Wage.

“Our members are committed to keeping pump prices as low as possible for their customers but they are not immune to the impact of geopolitical events outside of their control.

“We have been working closely with the Government as they develop their fuel price transparency scheme, which will help motorists find the cheapest fuel available to them in their area.”