Squeezed motorists being ripped-off, the AA warns

Hard-pressed motorists are being ripped off by petrol retailers as the falling cost of fuel on the wholesale markets is not being reflected on forecourts, the AA has warned.

The motoring group said that the wholesale price of petrol has fallen by around 9 pence a litre over the past month. However, average prices on UK forecourts have fallen by less than 4 pence a litre.

Edmund King, the AA’s president, said it “beggars belief” that motorists are paying over the odds. He called on George Osborne to take action to help struggling drivers. The Chancellor is under increasing pressure to drop January’s planned increase in fuel duty, which will add a further 3 pence to a litre of petrol.

The AA said that across Europe, the wholesale price of petrol which is the price that retailers pay for fuel - fell from around 54 pence a litre at the beginning of October to around 45 pence a litre by the end.

With VAT, this should have knocked average UK petrol prices down by 10p to 11p a litre, the AA said.

However the group’s analysis found that petrol pump prices fell by less than 4p a litre between mid-October and the start of this week.

While average petrol prices have gone down from 139 pence a litre in mid October to 135 pence now, diesel prices have dropped from 144 pence a litre to 142 pence.

High petrol prices have become an increasingly political issue in recent months.

In the summer The Daily Telegraph revealed that motorists may have been paying too much for their petrol because banks and other traders are likely to have tried to manipulate oil prices in the same way they rigged the Libor interest rate. Concerns about the reliability of oil prices came to light after a report for the G20 found the market is wide open to “manipulation or distortion”.

Mr Osborne has come under growing pressure to drop the forthcoming increase in fuel duty, which will add a further 3 pence to a litre. On Monday business leaders said that the rise should be ditched to save “more pain” being piled on consumers.

The AA’s Mr King said that urgent action is needed.

“It should beggar belief that, after the trauma of high fuel prices in the spring, the same thing should happen again six months later.

“Recent political focus has been on January’s 3.02 pence-a-litre fuel duty increase, either ignoring or unaware that duty’s ugly sister unrestrained wholesale prices has been running rampant in the fuel market.”

Mr King said that the Government “momentarily had a grip of this monster” when Justine Greening, the previous Transport Minister, called for the petrol industry to increase transparency about wholesale prices.

“The Government said it was going to tackle high gas and electricity bills, yet it lets drivers and businesses down by not reacting swiftly to runaway wholesale and pump prices,” said Mr King.

He added that the average domestic energy bill in the UK is over £1,200 a year but the cost of fuel for the average car consuming 1,200 litres of petrol a year is over £1,500.

Regionally, the AA said that drivers in the North and the Midlands have seen the greatest cuts in the price of petrol over the last month, with drops of “at least 4 pence a litre”.

In the South and East-Anglia, however, average prices have been cut by between 3.3 pence and 3.6 pence a litre.

The AA’s findings come despite a supermarket price war over petrol. Experts have argued that while large supermarkets can afford to cut prices, independent forecourt retailers in rural areas are not able to. Higher prices at independent petrol stations are likely to have dragged the AA’s average figures up.