Despite a significant drop in wholesale prices, motorists are not seeing much change in pump prices, according to the latest information from the AA. The motoring organization reported that petrol costs for garages have plummeted to levels last observed in 2021, before the onset of the conflict between Russia and Ukraine. This decline was accompanied by a decrease in oil prices to below $60 per barrel, the lowest since May, driven by talks of a potential peace agreement between the two nations, leading to an anticipated oversupply in the oil market next year.
Between the third week of November and the end of last week, the cost of petrol at fuel stations decreased by over 7p per liter. However, the average pump price for petrol saw minimal adjustment during the same period, standing at 137.3p per liter nationwide at the beginning of this week, just a 0.2p decrease from the start of December. The AA estimated that if the entire wholesale price drop had been passed on to consumers, they could have saved approximately £4.60 on filling a standard 55-liter tank.
Diesel prices have also experienced a slight decline on forecourts, albeit less than the fall in wholesale costs. The average diesel pump price dropped by a third of a penny, from 146.9p per liter at the start of December to 146.6p this Monday.
As many motorists prepare for holiday travel, the AA’s findings highlight that drivers may not be benefitting fully from the recent reductions in fuel costs. While the exact reason for the delayed adjustment remains unclear, the AA expressed concerns over the lack of substantial price decreases and the potential impact on consumers and businesses. The organization’s spokesperson, Luke Bosdet, emphasized the need for more significant price adjustments to reflect the market changes.
Following previous warnings from the UK’s competition watchdog regarding inflated fuel price margins, concerns over potential profiteering in the industry persist. The Competition and Markets Authority’s upcoming report on fuel prices and margins is highly anticipated, with any indications of increased profit margins likely to intensify scrutiny on retailers. Gordon Balmer, executive director at the Petrol Retailers Association, affirmed that reductions in wholesale fuel prices should ideally translate to savings for consumers, especially as the holiday season approaches.