In the News
Sticky Prices in Retail Fuel - What Goes Up Doesn't Always Come Down!
6th January 2023
The petrol sector is under fire for proving Keynes right about sticky prices. Although petrol and diesel prices are falling, according to the RAC they're not falling fast enough. Wholesale prices have fallen but whereas the average price of petrol is now 151p per litre and the average price of diesel is 174p, they think it should be 140p and 160p.
Given that the Competition and Markets Authority are already looking at whether petrol retailers passed on cuts in fuel duty to consumers, and their initial assessment identified so-called 'rocket and feather' pricing, you'd have to wonder what it is that stops prices from falling. Unless, of course, you're John Maynard Keynes and you've identified that it's in company's interests to keep them high, if they can.
And, think, how might the market structure increase the likelihood of prices remaining high?
Prices in Northern Ireland are a good reference for what should be happening across the rest of the UK 🇬🇧
— The RAC (@TheRAC_UK) January 6, 2023
Petrol and diesel prices there were 7p and 9.5p, respectively, cheaper at the end of December 👛
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In Europe, prices are also considerably cheaper as the average price of a litre of unleaded is 144p and diesel 152p 🇪🇺
— The RAC (@TheRAC_UK) January 6, 2023
In fact, when compared to the 27 EU countries we currently have the second most expensive diesel and the sixth most expensive petrol 🥈
🧵[4/5] pic.twitter.com/X2Esu0O0x7
Graham Watson
Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.
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