Yahoo Finance RAC urges petrol pumps not to hike fuel prices
The RAC is urging retailers not to hike fuel prices as the cost of oil rises to nearly $100 a barrel, its highest level since 2014.
The cost of one barrel has gone up by more than 60% in the last 12 months alone, costing around $60 in February 2021.
As global oil production continues to fall behind demand, which is increasing as the pandemic begins to wane, a single barrel has risen to $98 in the last week.
Moreover, recent tensions between Ukraine and Russia — the world’s third biggest oil producer — have caused prices to climb further.
Despite this, the RAC do not see a justification for hiking fuel prices during a difficult period for many consumers.
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The company's fuel spokesman Simon Williams said: “With the price of oil now at a level not seen in more than seven years and a cost of living crisis mounting, we’re on a knife-edge when it comes to pump prices.
“On the face of it, the prospect of $100 a barrel oil is a frightening one but from a driver’s point of view it’s only going to spell bad news if major retailers decide to take bigger margins.
"At the moment, we can’t see any justification for a big leap in forecourt prices so we’re urging retailers to continue taking normal margins on each litre they sell. This will ensure drivers, many of whom depend on their vehicles, aren’t forced to pay even higher prices."
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Last year, the motoring service company criticised British supermarkets for raising pump prices "unnecessarily", including the big four — Asda, Sainsbury's, Tesco and Morrisons.
On 20 November 2021, the price of diesel reached a record high of 151.1p per litre, while petrol peaked on 21 November at 147.72p per litre.
Overall, the profit made by retailers on the sale of fuel has fallen from its unprecedented heights in December 2021, down to a more normal level.
Hence, Williams pointed out that the prices charged at forecourts today are considerably fairer than they were at the end of last year.
He said: "The fact prices at the pumps have hardly changed despite oil approaching $100 demonstrates just how incredibly unfair retailer margins were in December. It was as if oil was already $100 a barrel then when it actually averaged just $87 across the month."
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He did admit, however, that if the cost of oil continues to climb or the pound loses value against the dollar, retailers will have little choice but to pass these price rises onto consumers.
"Our Fuel Watch data shows we’re not quite at that point yet, but if oil were to reach $110 a barrel, and retailers kept their current margin, it would add about 7p to a litre of unleaded diesel, taking average prices to astronomic new levels of 154p and 158p respectively.”
