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7 months ago

Fuel Retailers Accused of Crude Profiteering

Fuel retailers have found themselves back in the spotlight as pump prices continue to surge, leading to concerns about overcharging. The effects on SMEs are particularly pertinent in the wake of this price hike. In this article, we examine the recent fuel price increase, its implications for business and the varying perspectives.

Pump Prices Surging

Data released by the RAC has shown an alarming rise in fuel prices, with diesel costs surging by 8p per litre to reach an average of 163.1p. Petrol prices also shot up, climbing by nearly 5p per litre to 157p, causing concern for motorists and businesses alike.

The RAC attributed these price hikes to production cuts agreed upon by the OPEC+ syndicate of oil-exporting nations. These cuts have led to a rise in the cost of Brent crude oil since July 2023. The cost of a barrel has crept towards the $100 mark in recent weeks, currently sitting at $90.

Pumping petrol at forecourtMoreover, the weakening of the pound against the US dollar has compounded the issue, as oil is priced in dollars, resulting in additional costs for fuel consumers, including SMEs.

Accusations Aimed at Retailers

The RAC has accused retailers of overcharging petrol customers, citing a 7p per litre overpricing compared to the wholesale prices. This accusation comes just a matter of months after supermarkets faced criticism from the Competition and Markets Authority (CMA) over their pricing decisions, forcing them to cooperate with a fuel transparency system.

Spokesperson Simon Williams expressed concern over the situation: "It's worrying that retailer margin across the UK is higher for petrol than it should be considering the big four supermarkets were told off by the Competition and Markets Authority for overcharging drivers by £900m."

Retailers Have Their Say

The Petrol Retailers Association (PRA), which represents independent forecourts and holds a significant share of the fuel market, dismissed the RAC's claims.

Executive Director Gordon Balmer hit back, saying: "Contrary to claims made by the RAC, our members are not unjustifiably pricing petrol higher than needed. Fuel margins have been under pressure due to increased operational costs that our members have had to bear.

"To address rising labour expenses, energy costs and the highest inflation rates in recent years and reduced fuel sales, margins have inevitably increased. Attempting to whip up public anger by suggesting otherwise is deeply irresponsible.

"The PRA remains committed to advocate for our members and promote transparency within the sector. We are willing to engage with any mediator to facilitate a constructive and informed dialogue on these critical issues."

SMEs Hit in the Pocket

SMEs are a vital part of the UK economy, and many rely heavily on transportation for their operations. The surge in fuel prices can have a domino effect on these businesses, leading to increased operating costs and potentially forcing some to pass these costs on to consumers.

Higher fuel costs directly impact profitability for businesses in the logistics, delivery and transport sectors. These companies often operate on tight margins, making it challenging to absorb significant increases in overhead costs.

As fuel prices continue to rise, it’s crucial for both policymakers and businesses to find sustainable solutions to mitigate the impact on SMEs, ensuring the continued health of this vital sector of the economy. Whether through Government support or increased transparency, addressing this issue is essential for the well-being of the economy.

Fuel Cards a Valuable Tool

Whether your business relies on a single vehicle or maintains an entire fleet, fuel expenses can quickly add up and affect your bottom line, which is where fuel cards come into play. Fuel cards offer a convenient and cost-effective solution for SMEs across the UK.

Selecting the right fuel card for your business is crucial. Different providers offer various features, rates, and benefits, so it's essential to research and compare options to find the one that best suits your needs.

When selecting a card, it's essential to take into account the size of your vehicle fleet, the specific fuel needs of your vehicles and the usual refuelling locations.

It's also advisable to verify whether the fuel card providers you're considering offer additional services like online account management and reporting tools that integrate with your accounting software.

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Sam White