UK drivers are still paying way over the odds for fuel despite a 9p a litre saving on average prices in December.

UK drivers to pay as much as 20p more per litre of petrol than drivers in France

RAC Fuel Watch data shows petrol fell by 8.4p last month to 151.06p, making a full 55-litre tank for a family car £4.63 cheaper (£83.08). Diesel came down by 9.4p to 173.97p, meaning a complete fill-up was £5.19 less than at the start of the month, standing at £95.68.

Meanwhile, following pressure on the big four supermarkets, the average price of unleaded there fell by 10p a litre from an average of 157.86p to 147.76p, while diesel dropped by 11.4p from 181.66p to 170.23p.

But the RAC believes drivers should have seen much bigger drops after large reductions in wholesale costs during Q3. These fell considerably from mid-October and have since remained largely unchanged, with petrol averaging 106p a litre throughout December while diesel was 123.4p.

And it says petrol should be being sold around the UK for 140p – 11p less than the current UK average – while the diesel figure should be nearer to 160p a litre – 14p lower than the average at the end of 2022. That’s allowing for a 10p-a-litre retailer margin – 3p more than the long-term average.

RAC fuel spokesman Simon Williams said: “On the face of it, December looks like it was a good month for drivers with 9p coming off at the pumps on top of November’s 6p, but there’s no question that the drop should have been far bigger given how far wholesale prices have come down.

“For weeks we’ve been calling on the big four supermarkets to cut their prices more substantially to give drivers a fairer deal when they fill up, so even though they have reduced their prices collectively by more than 10p a litre in December, they are still nowhere near where they should be given the scale of the drop in wholesale prices. We hope the Business Secretary’s intervention just before Christmas puts more pressure on larger retailers to do the right thing.”

The RAC also said that prices in Northern Ireland were a good reference for what should be happening across the rest of the UK.

Petrol was 4.5p cheaper there than the UK average at the start of December but was nearly 7p lower at the end of the month at just 144.43p. The difference was even more pronounced for diesel; a litre was 7p cheaper than the UK average at the beginning of December and 9.5p less by the close at 164.55p.

“If fuel can be sold this cheaply in Northern Ireland, then this must mean something is very wrong with fuel retailing in mainland UK,” Williams affirmed.

While Northern Ireland does have a fuel price checker website run by the Consumer Council, this isn’t the main reason prices are lower there, according to the RAC. It notes a combination of factors making fuel cheaper, including a higher retailer-to-car ratio than in the wider UK, more fuel distributors as well as the presence of sometimes cheaper fuel across the border in the Republic of Ireland.

“Interestingly, the supermarkets also don’t have the same hold on fuel retailing in Northern Ireland with only 28% market share compared to 43% on the other side of the Irish Sea,” Williams continued.

Fuel prices in Europe are also considerably cheaper; the average price of a litre of unleaded is 144p and diesel 152p. In France, unleaded is an average of 146p and diesel 154p. Compared to the 27 EU countries we currently have the second most expensive diesel and the sixth most expensive petrol.

In his letter on 22 December 2022, Business Secretary Grant Shapps warned fuel retailers that the Government was looking closely at the results from the Competition and Markets Authority’s (CMA) initial update report on its market study into the supply of road fuel in the UK. Published on 6 December, the probe by the UK’s competition watchdog found that drivers had been hit by so-called ‘rocket and feather’ pricing on road fuel last year and highlighted that drivers had faced the most volatile 12 months for fuel prices on record.

Shapps said that he was “committed to ensuring retailers are offering a fair deal at their forecourts” and would “not hesitate to act to ensure competition is healthy and consumers get a fair deal on their fuel”.

On the same days as the letter from Shapps, the RAC also published new data warning of record highs for petrol and diesel over the festive period, making it the “the most expensive ever festive getaway on the roads”. It also highlighted a “bizarre situation” where many smaller independent retailers are charging far less for their fuel than the supermarkets.

Membership-only retailer Costco also remains one of the cheapest places for fuel. It’s currently charging a store-wide average of just 137.3p for unleaded and 158.4p for diesel, which means members can save £7.50 on a tank of petrol (£75.51) and £8.50 for diesel (£87.17).