UK has most expensive diesel in Europe as retailer margins remain above average – RAC says

UK drivers are paying the most for diesel in all of Europe, according to car and breakdown services company the RAC.

The average cost for a litre of diesel is 155p, 5p more expensive than the second highest average amount of 150p a litre paid in Ireland and Belgium.

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Unleaded costs aren’t as comparatively high, only the 11th most expensive in Europe at an average of 149p.

There is “no good reason” for the high diesel price or for retailers in the UK not to cut pump prices at the pumps, the RAC said.

Why are prices so high?

The margin retailers are charging – the difference between wholesale costs and the amount it’s eventually sold for excluding VAT – is significantly above the long-term mean, according to RAC figures.

Lack of competition can be blamed for the sum, the company said.

“It’s important to note that in Northern Ireland, where there is greater competition for fuels in the absence of supermarket dominance, the average price of diesel is just 144.9p – 10p less than the UK average, and petrol is 6p cheaper at 142.4p.”

While the long-term average is 8p a litre, a margin of 18p is being borne by motorists at present, the figures show.

Lower fuel duty

The rise comes despite the government having cut the tax on motor fuels by 5p in March 2022 in an effort to help drivers with high oil costs after Russia’s invasion of Ukraine.

Other European countries which pay more fuel duty still overall pay less to fill up their vehicle tanks, the RAC data shows.

Italy has the same amount of fuel tax – the joint highest in Europe – but there diesel is still currently 7p cheaper than the UK at an average of 148p a litre.

Competition context

The RAC compiled the data using information from competition watchdog the Competition and Markets Authority (CMA).

The CMA had concluded its investigation into margins at supermarket petrol stations, saying increased supermarket profit margins led to drivers paying an extra 6p per litre for fuel in 2022.

In March of this year the regulator said the margins remained “concerning”.

As part of a push for price transparency, a pumpwatch proposal was floated, where forecourts would have to enter prices within 30 minutes of a change to enable drivers to easily access the cheapest petrol and diesel.

Rising costs and crime levels were given as reasons for higher pump prices, the executive director of the Petrol Retailers Association Gordon Balmer said.

“Retailers are grappling with unprecedented levels of theft, along with significant increases in business rates, energy costs, and the National Minimum Wage. These factors inevitably impact the final price at the pump.

“A substantial percentage of diesel transactions in the UK are made using fuel cards, which operate on vastly lower margins. This further compresses the margins available to retailers and contributes to the higher prices seen by consumers.

“Despite the challenges posed by increased operational costs our members remain dedicated to providing fair and competitive prices. The PRA encourages motorists to use resources such as petrolprices.com to find the best deals available.”