Supermarkets have doubled their margins on fuel since the start of Ukraine war, claims RAC

Following news that lower fuel prices helped reduce inflation last month new analysis by the RAC has revealed supermarket margins on petrol and diesel have more than doubled since Russia invaded Ukraine.

Before the Ukraine war, the major four UK supermarkets, which dominate the fuel retailing sector, were operating on a margin of just under 5p a litre on fuel.

This included 3.7p for petrol and 5.7p for diesel. However, the RAC’s data now reveals that these margins have increased to 10p a litre, with 9.3p for petrol and 10.8p for diesel.

Furthermore, the RAC Fuel Watch data for 2022 illustrates a hike in supermarket petrol margins to almost 11p a litre.

It even hit a shocking 20p in the aftermath of a new pump price peak of 191.5p recorded on July 3, triggered by the skyrocketing cost of oil.

For diesel, supermarkets have been enjoying an average margin of 15p due to significant drops in wholesale prices not being fully reflected at their pumps.

At one point, the wholesale price of diesel even fell below its cost for three months, resulting in supermarket margins reaching a high of 23p a litre in May.

This represents a substantial increase from 2016 when the supermarket margin on a litre of fuel was a mere 2.3p.

This margin rose to almost 6p in 2019 and remained stable through the pandemic years. However, 2022 saw this figure jump by 54% to over 9p a litre and alarmingly, it’s averaging almost 11p this year.

RAC fuel spokesman Simon Williams stated, “Our data clearly shows that inflation could have been lower had the supermarkets reduced their pump prices in line with cheaper wholesale costs.”

Williams added that while the costs of running forecourts might have increased, these bloated margins are hard to swallow for millions of drivers already grappling with the rising cost of living. “Everyone is paying more than they should be to a lesser or greater extent depending on where they live,” he said.

Positive developments have come in the form of government action following a Competition and Markets Authority (CMA) report that found supermarkets overcharged drivers by £900m last year.

This week, Energy Secretary Grant Shapps held a meeting with the country’s biggest retailers urging them to provide real-time prices immediately.

However, Williams believes drivers will only start seeing fairer prices when the official wholesale price monitoring body is established and empowered to penalise companies that do not fully reflect significant downward wholesale market movements on their forecourts.

“We will be emphasising how important this is for fuel price transparency to the CMA as part of our ongoing discussions with them,” he concluded.