Drivers continue to feel the pressure when it comes to filling up the tank as fuel prices have jumped yet again.
Last Tuesday, it was reported that UK petrol prices had hit a record high of 173p, with costs predicted to rise further after the EU placed a ban on Russian oil.
Unfortunately, those predictions were correct as updated figures from the RAC show the average price of petrol in the UK has once again risen to 192.6p.
Diesel too has increased to a record high at an average of 186.5p.
The RAC warned that drivers could have to pay up to £2 per litre if costs continue to rise.
Why are petrol and diesel prices so high?
As reported in Wales Online, oil prices are rising because it is more in demand, something which has not been helped by the ongoing conflict in Ukraine after Russia’s invasion in February.
Companies are cutting ties with Russia - the world’s third biggest supplier of oil - and according to the RAC, how much we pay at the pump is mainly affected by:
- the global price of crude oil
- supply and demand for crude oil
- oil refinery production and capacity
- the pound to dollar exchange rate, as refined fuel is sold in US dollars per metric tonne
- distribution costs
- the margin fuel retailers decide to take
- fuel duty charged by the Government, currently 52.95p a litre
- VAT charged at the end of every forecourt fuel transaction, currently at 20%
Higher oil prices mean higher petrol and diesel prices at the forecourts, but a “significant amount” of what we pay is tax.
According to the RAC: "The total proportion of tax we pay to the treasury varies depending on the pump price. For instance, with fuel at 120p a litre at the pumps, 65% of the cost is tax.
But at £1 a litre it rises to 75%, meaning 75p in every litre sold goes to the treasury. Fuel duty raises more than £26bn a year, which together with VAT charged on fuel, vehicle tax and ‘showroom’ tax totals, means motorists contribute more than £40bn a year to the Government’s coffers.”
The huge amount of tax paid every time we fill our cars up does not fully explain why some garages charge such different amounts per litre than others, however.
Attempts to glean some answers from Euro Garages have so far proved unsuccessful.
A Moto Hospitality spokesperson said: “We recognise fuel prices are higher than customers would like.
"The fuel price includes several elements, including oil price and taxation.
"Fuel prices at motorway service areas reflect a number of factors.
“In the past week, wholesale oil prices have risen by around 6%.
"As a business we had held off passing this price rise onto customers in recent days in the hope that prices would dip, however no such price drop has occurred, and we have now had to start reflecting some, but not all of the increased wholesale costs in our forecourt prices.
“At Moto, it’s been our ambition to find a way of lowering motorway fuel prices sustainably and to make a significant difference to what motorists pay on motorways.
"We are currently looking to achieve this with our digital fuel sign roll out which will enable us cut prices by 15p a litre, bringing us in line with the high street.
"Digital fuel signage roll-out is in progress for Moto Hospitality sites at Leigh Delamere East and West and Lancaster North and South. Moto plans to roll the signage out to all sites across the UK in future.”
Why is diesel now similar in price to petrol?
According to AutoExpress, the influx of cheap diesel from countries like Saudi Arabia has pushed the price of this fuel, which has always traditionally been a significant amount more expensive than petrol, closer to that of unleaded.
But the magazine says the fact we get a higher percentage of diesel from Russian than petrol, will swing the pendulum the opposite way.
What are the experts saying?
With regard to the current situation in across the UK, there are calls for more to be done to ensure that fuel prices for drivers do not spiral further out of control.
Simon Williams, RAC fuel spokesperson, said: “The cost of filling a 55-litre family car with petrol has now topped £98 for the first time in history as a result of a litre hitting a new all-time high of 178.5p on Monday.
"Diesel also rose to yet another record by reaching 185.2p which takes the cost of a tank to £101.86.
“With analysts predicting that oil will average $135 a barrel for the rest of this year drivers need to brace themselves for average fuel prices rocketing to £2 a litre which would mean a fill-up would rise to an unbelievable £110.
"The oil price is rising due to increased demand for fuel across the world as China eases its Covid restrictions and America and Europe go into the peak summer driving season.
"All this combined with a weaker pound at $1.2 means wholesale fuel costs more for retailers to buy.
"The wholesale price of diesel is fast approaching 160p a litre which, when you add 7p retailer margin and 20% VAT, would take the pump price over the £2 mark. We strongly urge the Government to take drastic action to help soften the impact for drivers from these never-before-seen pump prices.”
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