Way back in April, the wholesale price of fuel began to fall and has now dropped by around ten pence per litre. So why is it that prices at the pump have fallen by just seven pence per litre?
When the wholesale price of fuel goes up, retailers are quick to follow, calling “losing money” as defence. But as wholesale prices fall, they are slow to react, delaying the cuts while their margins are high.
And now the supermarkets have the audacity to claim they’re lowering prices as a favour to us! Asda announced this week (11 June) that their prices would be coming down in line with wholesale prices. Yet this is a full week after the cost of a barrel fell to its lowest in 17 months.
Since Asda’s move to lower prices, other supermarkets have followed suit. Not Tesco though, despite Chief Executive Philip Clarke’s comment: “The great hope would be that fuel prices are going to come down.” Why Mr Clarke, so you can sell it to us at the same price but with bigger margins?
Good news for Germany though, its government is to regulate the country’s fuel prices by forcing retailers to log price information, so consumers find straightaway if they’re being ripped off.
Edmund King, President of the AA, said: “Germany’s move towards fuel price regulation reflects a growing consumer and political backlash against high fuel prices at a time of recession.”
You’re right Mr King. So what about here in Britain? The good news is Transport Secretary Justine Greening has said she will consider legislation forcing retailers to pass on cuts in wholesale prices: “I’m really determined that motorists get a better deal.”
Very good Ms Greening. But hang on a minute, your government is set to hike fuel duty by another three pence in August. That will mean over 60 pence in every litre goes straight to the treasury as fuel duty. Not to mention the VAT we pay on the overall cost, including on the duty we’ve already paid.
RMI Petrol, which represents petrol retailers and forecourt operators, has accused Greening of trying to deflect criticism of the impending rise in duty, by heaping the blame on retailers. We agree, but retailers are still a large part of the problem. They need to bring down prices just as quickly as they put them up when wholesale prices change.
Author: Anthony Hobbs
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