Fuel prices static despite rise in cost of oil last month

Fuel prices remained almost unchanged in November despite a barrel of oil shooting up $10 to $46 – a 27% monthly rise, data from RAC Fuel Watch shows.*

The average price of a litre of unleaded across the UK at the end of November was 114.33p – having fallen very slightly (0.19p) from 114.52p at the start of the month. Diesel dropped by a similar amount from 117.85p to 117.63p (0.22p).

RAC fuel spokesman Simon Williams said: “Normally, a sudden surge in the price of oil would have spelled bad news for drivers, but they were spared a pump price hike due to the fact retailers had been sitting on accumulated wholesale petrol price savings of around 5p a litre for a number of weeks. This saving has now been all but taken up by the unleaded wholesale price jumping by more than 3p a litre in November.

“The situation for diesel drivers is even worse as pump prices were around 7p a litre more expensive than they should have been, meaning retailers should have passed on some of this to drivers with a sizeable cut. Instead they decided to make bigger margins, presumably to make up for lost revenue due to the reduction in driving caused by the pandemic. With the diesel wholesale price increasing by nearly 4.5p in November retailers are even less likely to pass on the extra 3p of margin they’re still benefitting from.”

The cost of petrol at the four big supermarkets was also virtually unchanged at 109.20p – a fall of just under half a pence a litre (0.39p) – but diesel reduced by a penny a litre (1.06p) to 112.66p.

This means a complete 55-litre petrol fill-up at the UK average price would set drivers back £62.77 (up 12p); for diesel the equivalent cost is £64.70. Those choosing to refuel at the supermarkets instead of paying UK average prices would save nearly £3 a tank – £2.82 for unleaded and £2.73 for diesel.

RAC fuel spokesman Simon Williams added: “The surge in the price of oil was caused by news of a number of viable coronavirus vaccines, signalling an eventual return to more normal life. At the end of last week the barrel reached a monthly high of $47– a price not seen since early March.

“As retailers have been benefitting from lower wholesale costs for several weeks, they have so far absorbed the increases in their overinflated margins. And luckily, it doesn’t look like all this ‘slack’ will be eaten up by the oil price rise, which hopefully has plateaued for the time being. As a result, we really shouldn’t see unleaded rising above its current price of 114p a litre, and diesel from 117p, over the next fortnight at least.

“But if the oil price was to continue rising you can bet your bottom dollar that as soon as the current wholesale price savings are completely absorbed retailers will be very quick to pass on any increased costs they incur to drivers at the pump.”