In August, UK motorists grappled with one of the largest monthly fuel price increases in over 23 years.
The RAC reported that the average price of petrol climbed by seven pence per litre, the fifth most significant monthly rise during this period of year.
Diesel followed suit with an eight pence per litre increase, making it the sixth highest monthly upturn.
A primary contributor to the escalation was the soaring price of oil, which surged by nearly $12 per barrel since July, and is now hovering around $87 per barrel. The so-called OPEC+ agreement, aimed at reducing oil supply, played a crucial role in this sudden uptick.
OPEC+, a group of oil-producing nations, collectively accounts for 40 percent of global oil production, exerting substantial influence on oil prices.
The wholesale fuel costs surged, resulting in higher prices at the pumps. A Competition and Markets Authority (CMA) report in July disclosed that drivers incurred an additional six pence per litre for fuel at supermarkets in the previous year owing to increased profit margins.
Diesel vehicle owners were notably affected, with elevated margins across all retailers resulting in an extra 13 pence per litre spend during the initial five months of 2023.
‘A Big Shock’
Speaking to The Times of London, the RAC’s fuel spokesman Simon Williams said: “August was a big shock to drivers as they had grown used to seeing far lower prices than last summer’s record highs.“Seeing £4 or more go on to the cost of a tank in the space of just a few weeks from a pump price rise of 6p–7p a litre is galling, particularly for those who drive lots of miles or run an older, less fuel-efficient car.
“While the increase is clearly bad news for drivers, it could have been far worse had the biggest retailers not let their inflated margins from earlier in the year return to more normal levels as wholesale fuel costs went up.”
Speaking to The Epoch Times via email, Howard Cox, founder of motorists pressure group FairFuel UK and the Reform Party candidate for London mayor, said: ‘There is no justification for such a huge acute rise in pump prices.
“Oil prices have risen but not to justify such a hike. The new Energy Secretary Claire Coutinho must implement my popular PumpWatch plan that’s backed by the CMA.”
Mr. Cox warned that the government “continues to tread lightly with the opportunistic fuel supply chain businesses still allowing them to hit drivers with spurious pricing that has no relationship to wholesale costs.”
Fuel Competition ‘Is Not Working’
Sarah Cardell, the CMA’s chief executive, told The Times of London, “Competition at the pump is not working as well as it should be and something needs to change.”Cardell wrote to retailers in August, saying: “[The] temporary scheme relies on the voluntary cooperation of fuel retailers. The purpose of it is to deliver quickly some of the benefits of open accessible pricing information to consumers whilst awaiting legislation.
“It will provide more recent pricing data, in an open and unencumbered manner, than is currently available. We recognise the interim scheme is limited, especially given that there will sometimes be a lag between the setting of forecourt prices and the prices displayed by the third-party comparator. This is why we have recommended that a full statutory scheme be put in place.”
Supermarket Asda was found by the CMA’s report to have played a role in initiating the rise.
Both Asda and Morrisons, the UK’s cheapest fuel sellers, increased margins, with Asda’s 2023 target over three times that of 2019, while Morrisons doubled its margin target during the same time. Asda was also fined £60,000 for lack of cooperation in the CMA probe.
Rising transport costs may also impact supermarket prices and subsequently challenge Prime Minister Rishi Sunak’s goal to cut inflation to 5 percent by year-end.
