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Fuel Pricing at UK Forecourts

In a recent report, the RAC stated that UK petrol drivers were overcharged by 10 pence a litre in December 2021, the equivalent of £6.00 per tank of fuel. Collectively the RAC said this had cost drivers of petrol and diesel cars £156 million over the month.

We have investigated the RAC’s claim using prices UK drivers reported to us during December.

Using the wholesale fuel price benchmark on which most purchasing is based, our analysis indicates between June and October 2021, the average gross margin a forecourt made was 8.70 pence per litre, with margins varying between 6 and 10 pence. According to our analysis, November’s margin was just above 11 pence per litre. In December, this increased to 15 pence per litre.

During this time, the pricing spread across fuel stations remained relatively consistent, indicating that the whole market moved together generally. We didn’t see a broader range of prices across the petrol stations in December than any other month.

So, it does appear there may be some credibility in the claims made by the RAC. However, this doesn’t mean that all forecourts follow the same trend. This analysis is a simplification of the fuel supply chain. It doesn’t consider factors such as the cost of stock or purchasing patterns, and it makes assumptions on freight costs and purchasing premiums. Forecourts with a high turnover of stock may well have benefited from the drop in wholesale prices, but not all forecourts would have been able to purchase as frequently as the wholesale market dropped.

Gordon Balmer, Executive Director of the Petrol Retailers Association (PRA), who represent independently owned forecourts, stated, “the costs of running petrol stations rose all year, with electricity up 19%, vastly reduced [net] margins from fuel cards as well as increased national insurance and wage inflation.”

Government data shows the average petrol price at the start of January 2022 was £1.45 per litre and diesel was just under £1.49. The wholesale price of Brent crude oil has started to climb back up beyond December levels and currently sits around $84 per barrel. The Brent price reached a seven-year high of $86.50 per barrel earlier this month.

If the increase in margins that this data, along with the RAC’s analysis, appears to show is a result of ongoing increases in petrol stations costs, then we may not see a reduction in the pump price for some time.

With prices still high, ensure that you get the best deal by trying to fill it before your tank gets too low. Also, remember to use the myAutomate App to find nearby petrol stations and look for the best price. You can do this in your local vicinity or search for locations where you intend to travel.