Fuel giants are under fresh pressure from Downing Street to pass on tax cuts to motorists as diesel prices hit a new high.
Business Secretary Kwasi Kwarteng has written 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.
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.
— HM Treasury (@hmtreasury) March 23, 2022
In his letter, Mr Kwarteng said the British people are “rightly expressing concern about the pace of the increase in prices at the forecourt”, and are “rightly frustrated that the Chancellor’s fuel duty cut does not appear to have been passed through to forecourt prices in any visible or meaningful way”.
“It is also unacceptable that different locations even within the same retail chain have widely different prices,” he wrote.
“The Chancellor and I therefore want to re-emphasise and communicate again our expectation that members do everything possible to ensure that drivers are getting a fair deal across the country.”
The Business Secretary said that, as a result of “perceived intransigence to date”, his officials recently engaged the Competition and Markets Authority about the issue, and the regulator has been “closely monitoring the situation”.
“I have been reassured that they will not hesitate to use their powers to act against petrol stations if there is evidence that they are infringing competition or consumer law,” he added.
Earlier, the Prime Minister’s official spokesman 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.”
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.”