Reductions in wholesale costs for diesel are being passed onto motorists, however, AA says

Petrol pump prices are falling for the first time since January, but not as quickly as wholesale costs, suggesting retailers are not immediately passing on savings to motorists.

According to analysis by the AA, using data, petrol pump prices have dropped 1.5p to 148.6p a litre in the past three weeks, after peaking at 150.1p in the final week of April.

However, the wholesale cost of petrol has fallen by 4p since mid-April to 55p a litre, according to the motoring group.

“The fuel trade talks of trying to change the narrative on pump pricing, emphasising its higher costs,” said AA spokesman Luke Bosdet. “However, when a drop in wholesale costs equivalent to a £2 saving from a tank of fuel barely shows weeks later, it looks very much like the same old story.”

A recent fall in the wholesale price of diesel, of 2p-3p to 57p a litre at the beginning of May, had been largely passed on to motorists, with pump prices dropping by 3p to 154.9 a litre since then, the AA said.

However, despite petrol and diesel wholesale costs now being almost “neck and neck”, diesel pump prices were still more than 6p dearer than petrol.

The crude oil refining process produces more diesel in summer, according to Nationwide Fuels, making it cheaper and more readily available than winter grade diesel.

The AA said forecourt retailers had “consistently stated” they compensated for lower margins on diesel from business fuel cards and contracts by “substantially marking up” pump prices for the private motorist.

In October 2021, Petrol Retailers Association executive director Gordon Balmer said in a letter to the AA: “I would also point out that the delta between retail prices and wholesale prices may not take account of credit and debit card transaction costs and also extremely low margin fuel card transactions (especially bunker cards).

“You will be aware that our members provide around 75% of the high speed diesel pumps which serve transient HGV’s and so have a higher exposure to ‘bunker cards’ than for example supermarkets.”

The AA’s Bosdet said: “Somebody’s got to pay for those discounts and the fuel retailers say it’s not them.

“Hopefully, price transparency will send the private punters to the cheaper forecourts and the expensive ones will have to rethink the way they treat potential customers.”

The motoring group said the government and CMA’s pump price transparency scheme was “taking shape” in some areas of the country.

A comparison of prices in the week commencing 13 May with those listed by the CMA last Wednesday showed some retailers were slashing their prices in line with wholesale cost reductions, the AA said. 

Along the southern end of the M5, one service station had cut its petrol price by 5p and its diesel price by 7p. On the A303, one had cut its petrol price by 3p a litre and others had cut 4p off a litre of diesel.

“Clearly, there are some very competitive pump prices available and some retailers dropping theirs in line with lower wholesale costs,” said Bosdet. “However, they are too few to bring down UK average pump prices as quickly as drivers and the country’s fight against inflation need.”