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Diesel drivers getting raw deal on pump prices

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The wholesale cost of diesel is falling in response to increased production in the Middle East – but retailers are refusing to pass on the benefits to drivers.

Petrol pump

Fuel retailers have been accused of keeping the price of diesel artificially high – despite the fact that its wholesale cost is now lower than petrol.

The RAC said that throughout June, its Fuel Watch report showed that the wholesale price of diesel was between 1p and 3p a litre lower than petrol.

'Cut-throat pricing'

But the average price of a litre of diesel at the pump was 120p compared with 117p for petrol.

The RAC’s fuel spokesman Simon Williams said: "Wholesale petrol hasn’t been cheaper than diesel since 27 May, yet since then, diesel pump prices have been up to 3p a litre more expensive than petrol.

"We realise that petrol pricing is particularly cut-throat and many retailers reduce prices and profit margins to stay competitive, but something really needs to change as diesel drivers are losing out and subsidising every fill-up of petrol."

The latest figures from the Society of Motor Manufacturers and Traders (SMMT) show that sales of diesel cars accounted for just under half the market in the first six months of 2015.

Explanation needed

So far this year, 666,000 diesels have been bought compared with 673,000 petrol models.

Williams added: "We would like retailers – particularly the supermarkets who tend to lead the way in forecourt pricing – to explain why they are maintaining an artificial gap between petrol and diesel.

"It would be very worrying if they were simply taking advantage of motorists’ expectations that diesel is always more expensive than petrol."

The RAC said that the wholesale price of diesel had fallen over recent weeks as a result of increased supply.

Petrol crane in Middle East

New production facilities

"A fundamental change in the fuel market is taking place as a result of Saudi Arabia opening two new refineries last year geared to the production of refined oil products, including diesel," Williams said.

"Saudi Arabia had previously concentrated on exporting crude, leaving refining to other countries, but greater European demand for diesel has led the kingdom to increase its refining capacity to create a profitable additional source of income."

Williams said the RAC expected this increase in diesel production to have a "long-term positive effect" on pump prices.

Since the start of July, some supermarkets had started making small price cuts, the organisation said.

Cut faster, sooner

"But we believe it would be fairer for motorists driving diesel vehicles if supermarkets made bigger cuts in one fell swoop rather than trying to phase price reductions over an extended period," Williams said.

The price of fuel is not the only issue of concern for diesel owners at present.

A number of local authorities have introduced higher parking charges on diesels in a bid to tackle air-quality problems.

This is as a result of recent studies showing that emissions of nitrogen dioxide from such cars are higher than expected.

'Demonisation of diesel'

In June, for example, Islington council in north London introduced a £96-a-year surcharge on parking permits for residents who own diesels.

But the SMMT said that such policies ran the risk of demonising diesel drivers.

Mike Hawes, the SMMT’s chief executive, said: "Today’s diesel engines are the cleanest ever, and the culmination of billions of pounds of investment by manufacturers to improve air quality.

"Bans and parking taxes on diesel vehicles therefore make no sense from an environmental point of view.

"We need to avoid penalising one vehicle technology over another and instead encourage the uptake of the latest low emission vehicles by consumers."

Hawes added: "The allegations against diesel cars made in recent months threaten to misguide policy making and undermine public confidence in diesel. It’s time to put the record straight."

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