Britain’s hard-pressed motorists today accused petrol stations of putting up their prices one day after Chancellor Rishi Sunak cut 5p from fuel duty and demanded that retailers pass on the reduction to drivers.
The cut, which is only the second reduction of the duty in 20 years, is a response to record pump prices following the Russian invasion of Ukraine and will remain in place until March 2023 after starting at 6pm last night.
But motoring organisations including the AA and the RAC warned that some retailers may refuse to pass it on to drivers. They have already been accused of failing to pass on a reduction in wholesale costs earlier this month.
And drivers were already reporting evidence of petrol stations increasing prices overnight, with one saying this morning, with one saying: ‘My local petrol station is 3p more expensive today than it was yesterday. Cheers, Rishi.’
Another added that a station in Darwen, Lancashire, had put up prices by 5p since yesterday and 8p since Sunday; while a third said: ‘Petrol stations in my area have raised the prices last night. So 2p save at most today.’
Asda and Sainsbury’s became the first major retailers to cut prices yesterday, announcing a 6p per litre reduction in petrol and diesel prices. But the RAC criticised the duty cut as a ‘drop in the ocean’ at a time of soaring costs.
And Gordon Balmer, executive director of the Petrol Retailers Association, which represents independent forecourts, warned that rising oil prices will ‘see the 5p cut cancelled out almost immediately’.
He said that while Mr Sunak was speaking, the price of Brent Crude went up by $6 a barrel, adding: ‘Furthermore, retailers still need to deplete their petrol and diesel stocks purchased before the duty cut, meaning that motorists won’t see a price change at the pumps immediately unless the Government backdates the duty cut to March 1.’
Coach operators have also been reacting to the cut, with Morag Milligan, operations manager at Milligans Coach Travel in Ayrshire, telling BBC Radio 4’s Today programme this morning: ‘It would have helped us if the prices of fuel had been stable, but the increase over the last month, it makes very little difference.
‘It will make slight difference but not much, because a tank of fuel for a coach a month ago was £570 and then the fuel increase meant it went up to £750. But obviously that was an increase of £180. So with the 5p duty, we’re only going to save £25 of that increase of £180. So we’re still really £155 out of pocket.’
Ms Milligan added: ‘I felt good that there was a 5p reduction but still not good enough, because we really need the price of fuel to decrease. It’s at exceptionally high levels. It’s not enough for our industry.’
She said trade bodies the Road Haulage Association and the Confederation of Passenger Transport are lobbying the government for an ‘essential user rebate’ of 15p per litre for the industry.
Ms Milligan also said: ‘For us obviously anybody coming to a price for coach hire is going to get an exceptionally high cost from us based on the fuel, in comparison to last year. Now obviously because the cost of living is going up, these people are going to think that’s possibly a luxury so they’re not going to book and they’re going to do without.’
Last night, Mr Sunak and Business Secretary Kwasi Kwarteng wrote to retailers, trade bodies and the supply chain to demand the reduction be passed on in full.
They said: ‘I know you will agree that it is vital that these savings are delivered to consumers as soon as possible, to deal with the increased pressures that the unprecedented global circumstances are bringing to the cost of living in the UK.
‘The public will rightly expect to see this historic cut reflected quickly in the prices shown on the forecourt.’
Mr Kwarteng will meet retailers tomorrow to press home the point. Supply fears triggered by the invasion of Ukraine led to an increase in the cost of oil and the soaring fuel prices.
As for the latest on oil prices, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said today: ‘There is little sign the pedal is coming off the accelerator for energy prices, amid a fresh round of volatility that has hit markets after Russia moved to retaliate in the economic war being waged.
‘Oil has climbed upwards again, with Brent crude marching back above $122 a barrel earlier as trade stays highly sensitive to the repercussions of the Ukraine conflict.
‘The price of natural gas has dipped back slightly after roaring upwards on Wednesday after Moscow announced it will only accept payment for its exports in roubles, in a tit for tat move after its foreign currency reserves were frozen. But UK natural gas prices remain at ten-day highs.’
Figures from the data firm Experian Catalist show the average forecourt price of a litre of petrol on Tuesday was 167.3p, while diesel was 179.7p. This is an increase of 18p per litre for petrol and 27p for diesel over the past month.
The Chancellor said the Government wanted people to know it would ‘stand by them’ in dealing with rising living costs. But critics will point out that government measures in France and Ireland have cut prices by at least 15 cents a litre.