Despite a significant decrease in wholesale prices, drivers are experiencing minimal changes in pump prices, according to the latest report from the AA.
The AA revealed that the wholesale cost of petrol has dropped to levels last seen in 2021 before the conflict between Russia and Ukraine, following a decline in oil prices to under $60 a barrel, the lowest since May. It is anticipated that the oil market will be oversupplied in the coming year.
While garages have witnessed a decrease of over 7p per liter in the cost of petrol since the third week of November, drivers have not yet seen a significant reduction in pump prices. The nationwide average for petrol remains almost unchanged at 137.3p per liter, despite the wholesale price drop. Had the full decrease been passed on to consumers, they could have saved approximately £4.60 on a typical 55-liter tank refill, as per the AA’s estimation.
Similarly, diesel prices have seen a minor reduction on the forecourt compared to wholesale costs. The average pump price for diesel only dropped by a third of a penny from 146.9p to 146.6p per liter.
As many motorists prepare for the upcoming Christmas travel season, the AA’s findings highlight that drivers may not be benefiting from potential savings at the pump.
The AA expressed concern over the delay in passing on the price reduction to consumers, without directly criticizing retailers. Luke Bosdet, the AA’s pump price spokesman, noted that some areas have even experienced an increase in pump prices, causing frustration among drivers and businesses. The stagnant pump prices in December, despite the wholesale cost decline, indicate a missed opportunity for savings.
This situation follows a warning from the UK’s Competition and Markets Authority earlier this year regarding retailers’ increased fuel price margins. The CMA’s upcoming report on prices and margins is expected to further scrutinize any potential profit margin expansions in the industry.
Gordon Balmer, executive director at the Petrol Retailers Association, emphasized that reductions in wholesale fuel prices are gradually reflecting in pump prices ahead of the holiday season.
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