RAC claims motorists are being ripped off by £5 million a day

Petrol prices in the spotlight again here with the RAC claiming that motorists are being ripped off.

Since the fuel crisis in October, they argue that despite falls in wholesale prices, retailers have only cut prices by 2p per litre and not the 12p per litre that should have been the case.

The RAC estimates that petrol retailers made an average of 16p a litre on petrol instead of the normal 6p. Margins among the leading supermarkets are usually lower than this.

Of course, the industry argues differently - but it's proof of a number of things: the oligopolistic nature of the market, the market power of petrol retailers, and their ability to exploit the inelasticity of demand, and, of course, Keynes's maxim about wage and prices.