Pump prices have remained relatively stable for drivers despite a significant drop in wholesale costs, as reported by the AA.
The motoring organization disclosed that the wholesale price of petrol has decreased to levels last seen in 2021 before the Russia-Ukraine conflict and subsequent price surge. This decline coincides with oil prices dropping to below $60 per barrel, the lowest since May, following talks of a potential peace agreement between the two nations. Analysts predict an oversupply in the oil market for the upcoming year.
Although garages started paying less for petrol in late November, with a reduction of over 7p per liter by the end of the week, drivers are yet to experience substantial savings at the pump. The national average petrol price stood at 137.3p per liter at the beginning of December, only marginally lower than the 137.5p per liter at the start of the month.
The AA estimates that if the entire wholesale drop was passed on to consumers, they could be saving approximately £4.60 when filling up a typical 55-liter tank.
Similarly, diesel prices on forecourts have seen a modest decline compared to wholesale costs. The average diesel pump price decreased slightly from 146.9p per liter at the start of December to 146.6p per liter by Monday.
As many motorists prepare for holiday travel during Christmas, the AA’s findings suggest that drivers may miss out on potential savings at the pump.
The AA expressed bewilderment over the delay in passing on the wholesale price reductions to consumers but refrained from criticizing retailers directly. Luke Bosdet, the AA’s spokesperson on fuel prices, remarked on the challenges faced by drivers and businesses due to stagnant pump prices.
Following concerns raised by the Competition and Markets Authority (CMA) about retailers’ profit margins exceeding historical levels, the CMA is set to release further details on pump prices and margins, potentially increasing scrutiny on the industry.
Gordon Balmer, executive director at the Petrol Retailers Association, emphasized that reductions in wholesale fuel prices are gradually being reflected in pump prices ahead of the holiday season.