Plaid MP calls on major fuel retailers to cut prices in line with lower wholesale costs
‘Largest fuel retailers are enjoying higher-than-average profit margins at a time when households and small businesses are struggling, Ben Lake MP
Plaid Cymru’s Treasury spokesperson, Ben Lake MP, has called on major retailers to cut fuel prices in line with lower wholesale costs.
Speaking in the House of Commons on Tuesday (14 November), he told the Exchequer Secretary, Gareth Davies MP, that the cost of fuel is a “big concern for rural constituencies” and asked for an assessment of the impact of higher margins on households.
Mr Lake has backed a campaign by the RAC for petrol prices to be cut by 5p in light of concerns that the biggest fuel retailers have increased their profit margins in recent months.
The RAC said the big four supermarkets were making the most profits from petrol - an average of 16p for every litre of unleaded fuel sold in October, and 12p for every litre of diesel.
It also said the profit on unleaded fuel was double the average the supermarkets had been making since 2012.
Speaking in the House of Commons on Tuesday, Mr Lake said:
“The Minister will be aware that a big concern for rural constituencies is the cost of fuel.
“The RAC has found that the margin enjoyed by the big supermarkets’ on fuel sales in October was double the figure for the year to date at 14p per litre. That reflects concerns raised by the Competition and Markets Authority that although wholesale prices of fuel fell in September and October, retail prices did not.
“What is the Treasury’s assessment of the impact that these higher margins will have on households in the coming winter?”
Mr Davies responded:
“Fuel duty is a major cost for households and businesses, we recognise that. That’s why in the Spring Budget 2023 the Chancellor extended the 5p temporary duty cut. This was a £5bn saving for motorists and £100 per average motorist, but we always keep this things under review.”
Speaking after the session, Ben Lake added:
“It is all well and good for the UK Government to cut fuel duty, but household budgets will not benefit from the decision if the supermarket fuel retailers absorb the duty cut in order to increase their profit margin on each litre of fuel, as appears to have happened in recent months. These higher-than-average margins follow revelations unearthed by a Competition and Markets Authority investigation this summer that the big four supermarkets had overcharged by as much as 6p a litre in 2022, to a total cost of around £900m.
“According to RAC analysis, the average profit margin on fuel prior to the war in Ukraine was 4.7p per litre, but since the outbreak of war this has increased to an average of 9.5p per litre. The average profit margin for October 2023 is higher still. It is clear that the UK’s largest fuel retailers are enjoying higher-than-average profit margins at a time when households and small businesses can ill afford the additional cost. The price of fuel is a concern across the UK as it is a key driver of inflation, but rural communities are particularly exposed to higher prices as we typically need to travel longer distances to access services, work, and education. Furthermore, at a time when bus services are being cut mercilessly, higher pump prices are compounding the impact of a lack of local public transport.
“The UK Government and CMA have themselves expressed concerns about the fuel retail market. It is high time that they act to ensure greater transparency in the way in which pump prices are set to ensure that they reflect a fair deal for all. In the meantime, I join the RAC in urging big retailers to cut fuel prices by 5p a litre to better reflect the wholesale cost of fuel.”