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Highlights:
- Even as global oil prices come down, fuel prices in the UK continue to touch record highs.
- The retailers have been accused of 'rocket and feather' pricing.
Fuel prices in the UK have been hitting new highs even though global oil prices are coming down. Figures from data firm Experian showed that on Sunday, the cost of petrol at forecourts reached 191.9p, while diesel touched 199.1p per litre on Saturday, before slipping to 198.9 on Sunday.
According to RAC, oil retailers can now put the brakes on continuously hiking pump prices as there's been a major reduction in wholesale prices. However, they are engaged in 'rocket and feather' pricing, it added. Rocket and feather pricing refers to the practice where retailers quickly raise the rates when the wholesale prices rise but aren't quick to decrease them when the global rates fall.
The Competition and Markets Authority will be looking at it very closely, as per RAC fuel spokesman Simon Williams. He was referring to the 'swift high-level' review that the watchdog is conducting after a request by Business Secretary Kwasi Kwarteng.
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Government's fuel duty cut fails to provide relief
The government had in March announced a 5p per litre cut in fuel duty to ease the burden on motorists from rising fuel prices. However, the cut has failed to make any significant impact in stopping the fuel rates from rising.
Last month, the Business Secretary raised concerns that the cut in fuel duty was not being passed on to the consumers. In a letter to the retailers, he said that the Competition and Markets Authority would be prompt in taking actions against those infringing competition or consumer law.
On the other hand, the government has also resisted demands for another cut in fuel duty to bring the cost down and provide some relief to the motorists.
In view of the development, let us look at some oil and gas stocks and analyse their investment prospects.
Shell Plc (LON: SHEL)
The British oil and gas giant holds a market cap of £155,717.54 million and its shares closed at GBX 2,101.50 on 27 June 2022. Over the past one year, the FTSE 100 constituent's shares have provided a return of 41.36%. On a year-to-date basis, the return has climbed to 30.26%.
BP Plc (LON: BP.)
The oil and gas supermajor is a constituent of the FTSE 100 index. With a market cap of £75,193.07 million, BP's shares closed at GBX 391.60 on Monday. Its one-year return currently stands at 20.31%, while the year-to-date return has reached 18.49%.
Harbour Energy Plc (LON: HBR)
The independent oil and gas company recently announced a share buyback program to repurchase ordinary shares worth up to US$200 million. It currently has a market cap of £3,331.64 million. The shares of Harbour Energy have depreciated by 0.16% over the past year, while the year-to-date return stands at 2.57%. The shares closed at GBX 363.10 on 27 June 2022.
Note: The above content constitutes a very preliminary observation or view based on industry trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
