Pump prices rise despite oil price falls
Latest figures from the AA show that average petrol prices have risen from 111.92p a litre in mid March to 113.29p in mid April, a 1.37p increase which adds 75p to the cost of filling a typical 55-litre petrol tank.
Diesel’s average price has also risen, adding 0.64p to the cost of a litre over the past month – up from 118.19p in mid March to 118.83p in mid April.
In contrast, though, the cost of oil feeding into pump prices has fallen. In the first two weeks of March, oil averaged $58.5 a barrel. In the opening fortnight of April, it has fallen to $55.7 or almost 5%.
The organisation added that fuel price transparency would have explained why oil and pump prices have gone in opposite directions. In the first two weeks of March, the wholesale price of petrol averaged $608 a tonne but that had risen to $613 in the first fortnight of April. And, with the value of the pound dropping from $1.511 to $1.481, the $2.8-a-barrel fall in the oil price turned into a 1p-a-litre increase at wholesale level.
For diesel drivers, transparency would have exposed a major price distortion at the pump, adding more than £3 to the cost of filling up a diesel car and £4.80 for a diesel van.
It added that last week, petrol retailers admitted they are adding an average of up to 6p to the price of a litre of diesel, with the Petrol Retailers Association saying: “the independent retailer often selling up to 4 grades of road fuel, has to obtain a financially acceptable average margin to ensure that the business is producing sustainable returns. Currently the margin available on petrol is extremely low – and so higher margins may be taken on diesel after adjusting for the severe margin depressing effect of fuel cards to the independent retailer sector.”
“Cars are like blank cheques for whoever feels the need to balance the books by plundering drivers’ pockets. Motorists prop up the Treasury to the tune of 10% of the UK’s total tax-take, and now the fuel retailers are taking £3 a tank extra on diesel to steady their finances,” said Edmund King, the AA’s president.
“Manifestos promise action and transparency on domestic energy bills, but nothing on road fuel price transparency. At the end of May, 17 rural areas will get a 5p fuel duty rebate and politicians will boast of the achievement as they try to get elected on 7 May. The fact of the matter is that, without pump price transparency, the voters in those areas have no way of knowing if they will get the full rebate or not – as happened in Shetland in 2012."
The RAC also commented on the disparity in prices.
RAC fuel spokesman Simon Williams said: “It is important to take a longer term view to understand how the cost of oil and currency fluctuations relate to pump prices, particularly as Brent crude now stands at close to $60 per barrel, up from $45 in mid-January.
“As fuel is traded in dollars the strength of the pound affects pump prices, and sadly the pound has weakened by 4% since January and is now at its lowest level for approximately five years. This has the effect of undermining the slight drop in oil prices in the first two weeks of April.
“So even though the price of oil was lower in the first two weeks of March than the same period in April, the wholesale price of petrol has actually increased by 3p a litre which inevitably will get passed on at the pumps. The interesting point, which still needs explaining, is the fact that the diesel pump price is still 5p more expensive than petrol when the wholesale price of both fuels is identical – something we highlighted three weeks ago.”