RAC argues supermarkets have been too slow to drop prices in line with wholesale market changes.
If you fill up your car at a supermarket, then you may be paying an unfairly high price.
That’s according to the RAC, whose analysis suggests that supermarkets are making a pretty penny from drivers at the moment by maintaining unjustifiably-high profit margins.
The motoring group accused supermarkets of indulging in ‘rocket and feather’ tactics, where prices are hiked swiftly when wholesale prices go up, but when those wholesale prices fall supermarkets are slow to follow suit with their own pricing.
The RAC’s data found that supermarkets are now enjoying margins of around 15p per litre on both petrol and diesel, and called for them to drop prices to a lower and more reasonable margin in order to support motorists during the cost of living crisis.
Going up but not down?
The RAC analysis noted that the price of wholesale unleaded hit 130p a litre in the middle of October, while for diesel it rose to nearly 158p. Prices charged for fuel on forecourts across the country swiftly rose to account for those price levels.
Since then wholesale prices have dropped substantially. Petrol for example has dropped by 13p to an average of 117p, while diesel has fallen by 22p to 136p.
Yet the price we pay for our fuel from supermarkets has not dropped by anything like the same levels.
The RAC found that the average price of diesel at a supermarket has dropped by just 3p per litre since Halloween, from 187.54p to an average of 184.41p, while petrol has declined just 4.4p to 160.96p from 165.36p.
It’s difficult to conclude that supermarkets are doing anything other than taking advantage of drivers here.
They wasted no time in hiking prices when wholesale costs rose, but are now dragging their heels over moving prices down in line with wholesale changes.
Why supermarket prices matter
When it comes to fuel, the prices set by supermarkets are really important. Over the years they have dominated this market ‒ the larger volumes they sell mean they can charge lower prices.
That’s obviously a good thing for motorists that fill up on those forecourts, but it has a knock-on effect on the non-supermarket forecourts in the area too.
In order to compete, they tend to have to charge lower prices too ‒ studies have previously shown that areas with large supermarkets have lower average fuel prices than those without a big Tesco, Sainsbury’s, etc.
Yet at the moment the RAC argues there is a “remarkable lack of competition” among the big supermarkets, which has meant that as it stands there are smaller, independent forecourts charging more competitive prices.
This has happened before though.
RAC suggested that supermarkets were enjoying similar margins in the run-up to Christmas last year ‒ traditionally a time when lots of us do plenty of driving as we head around the country to visit loved ones ‒ but failed to cut prices in a meaningful way.
The difference though is that petrol and diesel today is vastly more expensive than it was 12 months ago.
Making your money go further on fuel
It would be lovely to think that supermarkets might cut their prices and accept a lower profit margin on petrol and diesel over the festive period, but I’m not exactly holding my breath.
The sad reality is that it’s up to motorists to make sure they are getting the maximum bang for their buck when it comes to filling up.
The first consideration is to make sure you’re shopping around.
Many drivers rely on the same one or two forecourts simply because they are the most convenient, but a quick look on PetrolPrices.com will help you establish which is your cheapest local option.
If you’re buying petrol from a non-supermarket, then it may be worth making use of their loyalty schemes, while it’s also a good idea to think about how you pay for your fuel.
For example, if you use a cashback or rewards credit card, then you can get something back for the money you’re paying.
Sure, the supermarkets may be enjoying larger margins than are justified, but you can take the edge off that by getting some of the money back in cashback.