Oil prices are once again on the rise and, unsurprisingly, retailers have reacted like prime Usain Bolt in rising prices. We’ll wait for the same lightning reactions when it comes to lowering them again when oil prices fall…
The price of oil has risen by nearly $12 since the start of July with producer group OPEC+ - which is often called a ‘cartel’ due to the way it operates - reducing supply. This has led to an increase at the pumps of almost 7p-per-litre for petrol and 8p for diesel.
OPEC+ is a group of countries largely from the Middle-East and Africa as well as the likes of Russia, Mexico and Malaysia that collaboratively work to influence the global market to control prices and therefore profits.
Saudi Arabia is essentially the de facto leader of the group given it produces significantly more oil than all of the others and could, in effect, influence the market on its own.
Simon Williams, RAC fuel spokesman, said: “August was a big shock to drivers as they had grown used to seeing far lower prices than last summer's record highs.
“Seeing £4 or more go on to the cost of a tank in the space of just a few weeks from a pump price rise of 6-7p a litre is galling, particularly for those who drive lots of miles or run an older, less fuel-efficient car.
“While the increase is clearly bad news for drivers, it could have been far worse had the biggest retailers not let their inflated margins from earlier in the year return to more normal levels as wholesale fuel costs went up.
“Wholesale costs for both petrol and diesel started to rise in late July on the back of oil hitting $85.
“While the barrel price has stayed at that level throughout August, retailers had no choice but to pass on their increased costs at the pumps.
“Fortunately for drivers though, they have clearly been influenced by the CMA's investigation as, all of a sudden, margins are once again closer to their longer-term averages.
“It appears they used the wholesale price rise to subtly cover their tracks – after all, big reductions at the pumps soon after the CMA's findings were announced would perhaps have been far too obvious a step.
“All we can hope is that this move by many big retailers back to fairer forecourt pricing remains when wholesale costs go down again. Only time will tell.”