You drive past one petrol station at 142.9p. Five minutes later, another one shows 134.9p. How can there be an 8p difference between two stations just a couple of miles apart?
What Makes Up the Price of Fuel?
- Fuel duty: 52.95p (fixed)
- VAT: ~23p (20% of total)
- Wholesale cost: ~50-55p
- Retailer margin: ~10-15p (varies wildly)
The variation comes from that last slice: the retailer margin.
Why Margins Vary
1. Property Costs
A station in central London sits on expensive land. Rural Wales, not so much.
2. Business Model
Supermarkets treat fuel as a loss leader. Traditional forecourts rely on fuel for profit. Motorway services know you have no choice.
3. Competition (or Lack Thereof)
Areas with multiple stations have better prices. Isolated locations can charge more.
"Rocket and Feather" Pricing
The CMA found that when wholesale prices fall, retailers are slow to pass on savings. When wholesale rises, pump prices shoot up immediately.
This cost UK drivers £1.6 billion in 2023 alone.
What You Can Do
- Compare before you fill
- Don't wait until empty
- Avoid motorway services
- Don't assume loyalty pays