Just a fraction of the fall in wholesale diesel prices has been passed on at the pumps, according to analysis by the AA. While the cost for forecourts to buy diesel fell by nearly 20p a litre in recent weeks, average pump prices have dropped by barely 2p.
Retailers accused of unfair pricing
The study has sparked accusations that some retailers are not playing fair with drivers and may be using the Iran war—which previously sent pump prices spiralling—as cover to overcharge motorists. Critics call this 'rocket and feather' pricing, where wholesale price increases are passed on almost immediately but falls take much longer.
The development comes as Chancellor Rachel Reeves faces fresh calls to scrap her fuel tax hike, as higher pump prices generate hundreds of millions of pounds extra in VAT revenue.
Wholesale vs pump price disparity
The AA analysis found that since 4 April, just before a US-Iran ceasefire was announced, wholesale diesel prices have plummeted from 156p a litre to 138p on Friday. However, average diesel pump prices have only fallen 2.31p a litre since hitting their peak on 15 April. Similarly, wholesale petrol prices have fallen about 4p a litre in recent weeks, but average pump prices have dropped barely 1p since the 15 April peak.
AA fuel guru Luke Bosdet said: 'Diesel is the road fuel that powers haulage, deliveries, business and much of the rural community. The need to bring down diesel pump prices as soon as possible is essential.'
Iran war impact and political pressure
The Iran war, which began on 28 February, has cost drivers more than an extra £1.5 billion in higher pump prices, according to separate analysis by the RAC Foundation. It has increased pressure on Chancellor Rachel Reeves to scrap her 5p a litre fuel duty hike, set to take effect from September, which would add another £3 to the average cost of a fill-up. The conflict has already pushed up the cost of filling the average 55-litre tank by around £14 for petrol and nearly £30 for diesel.
While other countries have cut fuel taxes to help drivers, Labour has insisted on proceeding with the fuel tax increase. The Conservatives and Reform UK have urged Reeves to abandon the hike, as pump prices are expected to remain high for several more months due to the blockade of the Strait of Hormuz, which remains effectively closed, squeezing Western oil supplies and pushing up prices.
Political reactions and calls for action
The Liberal Democrats have gone further, demanding a 10p a litre cut to fuel duty, which currently stands at 52.95p a litre. Reform UK's Treasury spokesman, Robert Jenrick, today arrived at the Treasury in a party-branded double decker bus to call again for the fuel duty hike to be scrapped. He said: 'We're here to send a very strong message to Rachel Reeves, the Chancellor: do something now to help our hard-pressed motorists. Chancellors and finance ministers all over the world, from Australia to Germany to Sweden to Spain to Ireland, are acting to lighten the load.'
Pointing out that taxes account for around half the cost of a fill-up, he added: 'Rachel Reeves at the Treasury, she's raking it in at the moment, and we're just asking her to do a little bit to help working people across the country. Listen to the millions of Brits who are finding life hard at the moment. Take action. Lighten the load. Cut fuel duty now.'
A Treasury spokesperson responded: 'Motorists are paying more because of the war in Iran. This is not our war and that is why we did not join it. We are determined to keep costs down for motorists. That's why we have extended the 5p fuel duty cut twice until September and will continue to monitor the situation.'
