Petrol and diesel pump prices in the UK have fallen to their lowest levels in nearly three years, but motorists should expect a first rise in fuel duty for 14 years in next month’s autumn statement.
According to the AA, the average price at petrol pumps dropped to 139.5p a litre on Wednesday for the first time since October 2021, four months before Russia’s invasion of Ukraine triggered a global oil market rise.
Diesel prices fell to an average of 144.2p a litre on Wednesday, slightly above the price in July last year and the lowest since October 2021, the motoring group said.
Fuel prices have fallen to new lows just weeks before the Labour government is expected to introduce the first increase in fuel duty since the Conservatives put in place a freeze as a temporary measure in 2011, which was followed by a cut of a further 5p in 2022.
The RAC predicted last week that the 5p cut, which was retained in the spring budget in March, was likely to be scrapped. Unusually, the motoring group backed the idea, saying fuel retailers had failed to pass on savings to drivers.
The AA said pump prices had fallen in line with the drop in global oil markets, where Brent crude prices have fallen from above $80 a barrel in mid-August to $73 this week, but the savings were passed on “much sooner than would have been the case” owing to the anticipated fuel duty cut.
Edmund King, the AA president, said: “Pure and simple, the only reason why pump prices are at a three-year low this week is because of the 5p fuel duty cut. Removing it threatens to send millions of low-income drivers back into the era of ‘perma-high’ road fuel prices.”
He warned that reversing the cut would unleash a £3.30-a-tank impact on the budgets of 9 million motorists “most of whom are low-income and struggling to balance their budgets”.
The government is widely expected to raise fuel duty as it prepares for a “painful” autumn budget designed to plug the “£22bn black hole” in the public finances left by the previous Conservative government.
The fuel duty cut, introduced by Jeremy Hunt, was called a regressive policy that benefited the wealthiest in society by critics, including the Social Market Foundation (SMF) thinktank.
The SMF found that the combined impact of the fuel duty freeze and the 5p duty cut has cost the Treasury £100bn since 2011 and could knock £27bn off its coffers over five years. It found that the bottom fifth of earners would receive just 10% of the savings, compared with the top fifth, who would pocket 24%.
