Experts worry of inflated petrol prices over lockdown

Supermarkets accused of inflating petrol and diesel prices as lockdown hits

RAC says retailers may charge above the odds due to depressed demand

Supermarkets are hiking the prices of petrol and diesel above the wholesale cost, according to a watchdog, leading to drivers paying over the odds for fuel just as a UK-wide full lockdown is introduced.

RAC Fuel Watch, which monitors pump prices across the nation, found that three of the four big supermarket retailers raised their prices by more than the wholesale cost in December.

Average petrol prices rose 2.07p per litre to 116.46p, while diesel increased from 117.2p to 120p. However, the RAC said that based on the wholesale cost increase, drivers should only be paying 113p and 118p per litre respectively.

The only supermarket retailer to keep its prices in line with wholesale was Asda, which raised its prices 1.5p over the course of the month. Morrisons, Tesco and Sainsburys all raised fuel prices by 3p.

The cost of filling a 55-litre tank with petrol by £1.14 from £62.91 to £64.05, and by £1.25 from £64.75 to £66 for diesel.

Despite this, supermarkets are still the cheapest places to fill up, averaging 4p cheaper for unleaded and 4.5p cheaper for diesel than other fuel retailers. Refuelling at a supermarket currently saves drivers over £2 a tank.

This does not spell good news for independent petrol stations, which struggled during the first coronavirus lockdown as people were given orders to stay at home.

The chairman of the Independent Petrol Retailer’s Association told that in April 2020 some rural petrol stations had seen a drop in fuel sales of 85%, and that the government’s financial support was doing little to help due to the level of tax charged on petrol and diesel.

The RAC said it worried that the inflated forecourt prices could become more dramatic after the Prime Minister’s announcement that the UK will enter a third national lockdown until at least the middle of February.

RAC fuel spokesperson Simon Williams said: “While it remains to be seen just how much car use reduces during this lockdown, there is a risk that retailers will continue to hold back from offering a fair price at the pumps – no doubt justifying this by the fact that their ‘per litre’ profits will likely be considerably down.

“This tactic would seem quite harsh given that in the vast majority of cases people will only be using their cars for essential purposes, like shopping for groceries or getting to a place of work.

“Unfortunately, those who still need to fill up regularly are having to pay more than they should be as, by our calculations, both fuels should actually come down by 3p a litre in the next fortnight.”

According to Reuters, oil producers are now nearing an agreement to maintain rather than increase output in February. Talks between Russia and the Organisation for the Petroleum Exporting Countries (OPEC) reportedly faltered yesterday but resumed this afternoon (January 5).

Oil producers will hope that the result of the talks will help to avoid a situation like the one encountered last April, when US oil prices dropped below zero for the first time in history, due to more being produced than could be used or stored.