DRIVERS in Scotland being overcharged at the petrol pumps as sellers fail to pass on savings, despite the price of fuel plunging to a four-year low, new analysis has revealed.
The price of petrol in Scotland has dropped from £1.20 a litre in March, before the lockdown to £1.05 in May.
But rather than passing on the full reduction in wholesale prices, a new report from the consumer organisation Which? found that sellers were profiting with margins made almost doubling during the pandemic.
The report says prices should have dropped to 98.9p at the beginning of May raising questions about why savings were not passed on to motorists.
The report says that margins rose from 10p a litre to 18p - an increase of around 80 per cent - in the weeks after lockdown was introduced.
READ MORE: Petrol price war fuelled by coronavirus leads to pump cost drops
Global oil prices have slumped during the coronavirus pandemic.
Prices plunged in April to reach a 21-year low of less than $20 per barrel on April 21 compared with $69 in January. Oil and Gas UK has previously estimated that around 20 percent of UK production is uneconomic at a $50-per-barrel oil price.
The drop in the price of oil has an impact on the wholesale cost of fuel Which? says this should be reflected in the price people pay at the pumps.
But according to the report in the week that lockdown was announced in the UK, the average retail margin, which includes the cost of overheads and profit for suppliers and retailers, jumped from around 10p a litre to nearly 18p - by far the biggest jump of any week in 2019 and 2020.
For the same week in 2019, the margin was just 8p a litre and as little as 5p in April 2019.
Which? said that the margin increase may have been necessary for smaller independent petrol stations to survive the pandemic crisis.
But it said that some bigger independent petrol station groups – such as Motor Fuel Group, which has around 900 stations - are responsible for around 30 per cent of the market, and some will have made savings of "millions of pounds" during lockdown.
Which? said: "Currently, there are no established rules on the margins retailers can apply to pump prices, and, crucially, there’s not an independent fuel watchdog to monitor that these costs are fairly calculated."
Which’s own data also revealed that petrol is generally cheaper in towns and cities than in rural locations. But supermarket fuel forecourts, even in the countryside, are still cheaper than oil-company-owned petrol stations in cities.
Which? says the retail margin has already started to drop closer to pre-lockdown levels as demand returns to normal, but it says that the pandemic has highlighted "serious issues£ with the uncapped margins being set by fuel retailers, and the lack of an independent regulatory body to monitor these.
Harry Rose, Editor of Which? said: “While there may have been fair cause for some fuel sellers to increase retail margins in order to survive lockdown, there really is no excuse for some larger retailers to be keeping savings for themselves during the pandemic. For customers to be charged fairly at the pumps wholesale savings must be passed on.
“If you want to save money on fuel, buy an economical car and fill it up at a supermarket. Although if you have a local and convenient garage that you like using, do continue to give it your support.”
A recent survey found nearly half (45%) of respondents said that they use supermarket vouchers to reduce their fuel costs. However, the often high minimum spend requirements may mean that this is not a good value for money as it might seem. That is because those who can't afford the minimum spend, or who don't want to spend it, miss out on the savings on petrol.
Industry trade body the Petrol Retailers Association (PRA) said that retailers kept prices consistent with previous wholesale costs, amid falling demand, to "avoid significant losses".
They said that demand in rural areas during the first few weeks of lockdown in March dropped by 80 per cent and while in normal circumstances wholesale savings would have been seen by customers, retailers had to price fuel at pre-lockdown levels due to the drop in demand
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