UK auto groups attack supermarkets over fuel prices
Leading UK motoring organizations have accused the country’s biggest supermarkets of failing to pass on lower wholesale fuel prices to customers, with one urging the market regulator to reopen an investigation.
The RAC and AA, the two largest roadside assistance specialists, said while wholesale petrol and diesel prices had fallen sharply over the past seven weeks, supermarkets had only passed on a small portion of the decline while achieving higher than normal profit margins. the car drivers.
The organizations said retailers were fueling inflation, which hit a 40-year high of 9.4% in June, due to their outsized role in UK fuel markets, where they account for nearly half of all gasoline and diesel sales in volume. Supermarkets have always been among the cheapest fuel retailers in the country.
Earlier this month, the Competition and Markets Authority said a preliminary investigation commissioned by the government had found little evidence that fuel retailers were inflating prices. But the RAC urged ‘people not to assume that supermarkets are always the cheapest option for refueling’, and urged the AMC to reconsider the price of fuel in supermarkets.
“When fuel prices don’t drop at supermarkets, smaller independent stations have less incentive to quickly pass on wholesale price declines,” the RAC said. “We think it’s a scandal and every driver has the right to be very wronged.”
The RAC said that based on historical supermarket retail margins of around 7p a litre, current wholesale prices, fuel duty and VAT, they would expect petrol to be sold at £1.71 a litre.
Instead, the average fuel price at Tesco, Asda, Sainsbury’s and Morrisons was £1.86 a litre, suggesting retail margins are close to 20p a litre. Diesel prices are also higher than expected, the RAC said.
The recent drop in wholesale prices came as Brent prices have fallen around 11% since early June, while refining margins – another key driver of wholesale costs – have cooled.
The AA said it suspected supermarkets were under pressure to keep food prices low, leading them to seek the highest possible margins on fuel sales to compensate.
“Supermarkets have always had the dilemma of cutting at the pump, in the store or a combination, but right now they definitely seem to be favoring the store,” the AA said.
“But unlike food, where you can look for cheaper alternatives, there’s no alternative to petrol rather than reducing car use, and that’s not an option for everything. the world.”
The AA said while the desire to reduce food costs for customers was understandable, it could prove counterproductive given that high fuel costs tend to fuel inflation across the economy due its role in transporting goods across the country.
“Diesel fuels inflation of other goods and services unlike food,” he added.
Andrew Opie, director of food and sustainability at the British Retail Consortium, which represents large supermarket chains, said the organization understood “the cost pressures motorists face” and would do “everything ‘it can to offer the best value for money on petrol and diesel forecourts.’
Asda, which is historically known for rapidly reducing fuel prices, said that “despite continued volatility in the wholesale fuel market, Asda has consistently offered the lowest fuel prices in the UK”.
Others, including market leader Tesco, declined to comment without knowing more about how the RAC arrived at its hypothetical prices, but several supermarkets pointed to the difference in buying terms between them and independents.
Some retailers said independent stores track daily prices more closely, while supermarkets tend to buy more in advance.