Petrol firms defend ‘nauseating prices’ as business minister implores retailers to pass on fuel duty cut

Retailers have defended forecourt prices as politicians call for costs to be slashed after a fuel duty cut earlier this year.

Business minister Kwasi Kwarteng has written to businesses to implore them to pass on the savings from a 5p per litre cut in fuel duty introduced in March.

It comes after motoring group the RAC said retailers were taking an average of 2p more in profit per litre of fuel sold compared to before Chancellor Rishi Sunak introduced the reduction.

In a letter to fuel industry bodies, Kwarteng said the public were “rightly frustrated” that the fuel duty cut did not appear to have been passed through to consumers “in any visible or meaningful way,” he wrote.

RAC said retailers were taking an average profit of 2p per litre more than before the policy was introduced.

However, the Petrol Retailers Association (PRA) said these figures, which were first published in The Times, “do not tell the full story” and retailers’ margins were “often not enough to cover operating costs.”

Comparing pump prices to wholesale prices was not enough for a “comprehensive analysis,” which would take account of how much oil companies charge for fuel storage and delivery, card interchange costs, and development fuel costs.

The industry body’s boss Gordon Balmer called for a further reduction of fuel duty as rising oil prices had “effectively cancelled out” the discount.

Oil prices have shot up over the past two years and were further exacerbated after Russia invaded Ukraine earlier this year.

“While retailers were quick to pass on the Chancellor’s fuel duty cut, such measures are limited at a time when prices continue to climb,” Andrew Opie, director for food at the British Retail Consortium, said.

“Retailers understand the cost pressures facing motorists and will do everything they can to offer the best value-for-money across petrol and diesel forecourts, particularly if the price of oil falls.”

However, businesses have come under fire by campaigners and politicians, as cost of living increases put many households in a precarious position.

“It nauseates millions, that in a time of such financial uncertainty, rich businesses care so little for their deepening plight,” Howard Cox, founder of FairFuelUK said.

High costs come at a time when carriers and logistics operators are “already operating on wafer thin margins,” David Jinks, a spokesperson for Parcel Hero, told CityA.M. 

However, the firm warned it was “inevitable” that logistics firms would have to pass on higher costs to retailers and in turn consumers.

A change in rebated or ‘red’ diesel rules means the cost of moving refrigerated loads around the country has seen a radical increase, Parcel Hero added.

“We hope, in the light of most fuel companies significant profits this year, they will act quickly to pass on any price reductions and support their customers in the same way many distribution companies have sought to protect their own clients from the full impact of fuel cost rises,” Jinks said.