BP and UK supermarket chains urged to cut petrol prices

Car regulators on Wednesday called on BP and the Big Four supermarkets to lower petrol prices and provide greater assistance to Britons grappling with the cost of living crisis.

AA claimed BP – which unveiled its highest quarterly profit in 14 years on Tuesday – was charging “what they can get away with” at gas stations, while RAC accused Asda, Wm Morrison, Tesco and J Sainsbury of “not Desire to bring their prices down to a more reasonable level.”

The demand for fuel price cuts comes as the Bank of England is widely expected on Thursday to raise interest rates, perhaps by half a percentage point, to curb rising inflation.

The Resolution Foundation said that consumer price inflation is “reasonable” and could reach 15 per cent in the first quarter of next year, in part due to higher gas prices.

Automakers are concerned that fuel retailers are not fully conveying the recent drop in wholesale prices to their front-garage customers.

The RAC said wholesale prices for gasoline have fallen by 20 pence per liter since early June, after the value of crude oil plummeted, yet the average price drivers pay for unleaded fuel has only fallen by 9 pence.

Edmund King, AA’s president, said BP — which reported $8.5 billion in core earnings for the second quarter — should use its earnings to cut fuel prices, in a move that would lead to wider cuts in the front fields.

“It is right to assume that if a company is earning so many billions, why are its profit margins at the pumps higher than other retailers?” he added. “There’s definitely more to go out to help people.”

AA calculations show that BP prices last month averaged 191.17 pence per liter of gasoline, higher than any of the UK’s 10 largest fuel retailers, including Shell and the big four supermarkets. The UK average was 188.43 pence.

“If BP is more proactive in its pricing, that means Shell and others will follow suit, and that will bring prices down, making them more competitive,” King added.

There are about 1,200 BP-branded service stations in Britain, although the energy company said it only sets the price of fuel at the 300 sites it operates.

“At our price-controlled locations, we aim for competitive pricing, taking into account the local factors of each location, including competitors,” BP said.

BP said on Tuesday it had no plans to make cuts to fuel prices as the company is due to pay an energy dividend tax announced by the government in May to help ease the cost of living.

Meanwhile, the RAC pointed an accusing finger at the Big Four, which are responsible for about half of the fuel sold to drivers.

Supermarket executives insisted that they pre-purchased more of their fuel from smaller independent front yards, so it took longer to pass both the cuts — and the increases — in wholesale prices.

They also privately claimed that their front yards are still cheaper than those of the energy companies. Some groups, including Asda, have recently cut prices.

The British Retail Consortium, a trade body representing all major supermarkets, said its members “understand the cost pressures facing motorists” and will pass on cost reductions “as they feed them through the supply chain”.

Rishi Sunak, the former chancellor who is running against Secretary of State Liz Truss to be the next Conservative Party leader and prime minister, has previously called for companies to pass on the lower cost of oil to consumers at the pumps. “This continues to be his strong message,” his spokeswoman said.

Sunak, who is still a minister, said in June that he would consider another cut in the fuel surcharge after cutting it by 5p a liter in March.

This summer, the UK Competition Authority launched a market study on fuel prices.

The Competition and Markets Authority found “reason for concern” in rising refining margins – the difference between the price of crude oil and fuels such as gasoline and diesel.

Additional reporting by George Parker and Valentina Rumi

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