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December 2016 fuel price update

December 2016 fuel price update

Tide of rising pump prices held...for now

Supermarkets and more buoyant pound slow pace of pump price rises

17 December 2016

Supermarket pump prices, following the usual track of lagging behind rivals’ increases, have given temporary relief to drivers facing the impact of a 20% rise in the oil price over the past month, according to the latest AA Fuel Price Report.

Average UK petrol prices climbed back above 115p a litre this week, almost a month to the day that Asda initiated a supermarket price battle that eventually took the average to a low of 113.89p on 28 November. Diesel is back above 117.5p a litre, having bottomed out at 116.35p on 24 November.

However, mid-December pump prices across the UK are still below where they were a month ago. Petrol averaged 116.61p a litre in mid November but 115.09p at the start of the week, and 115.34p on Wednesday. Diesel averaged 118.41p mid last month, but was up to 117.54p on Monday and 117.83p on Wednesday.

Wrong fuel advice

Wholesale prices

Also in the past four weeks, both petrol and diesel wholesale prices have risen 4p a litre which will convert to closer to 5p a litre once VAT is added at the pump. It would have been worse had the pound’s slight improvement against the dollar, from $1.24 to $1.27, not shaved nearly a penny (0.8p) off the value of converting commodity petrol at $530 a tonne to petrol at 31.5p per litre - instead of 32.3p had the pound been weaker.

A 5p wholesale rise would be enough to push petrol and diesel prices above 120p a litre on many forecourts but, for now, supermarket pricing is helping to hold back the tide. Petrol and diesel at the Big Four average 4.5p a litre cheaper than at non-supermarket rivals. A month ago, supermarkets averaged around 3.5p a litre cheaper than the others. 

In many towns, petrol can still be sourced for just under 111p a litre and even 110p a litre in a couple of places in east London. However, drivers will have to expect higher costs to catch up on supermarket forecourts sooner rather than later.

 

New year price shock?

“The key question is whether supermarkets can hold off raising pump prices in line with wholesale increases over the festive period – a time when 12 million car-driving households will do a least one trip of 20 miles or more, according to our research,” says Edmund King, the AA’s president.

The key question is whether supermarkets can hold off raising pump prices in line with wholesale increases over the festive period
Edmund King OBE, AA president.

 

“The New Year, however, could be welcomed in with a price shock at the pumps. The hope then is that OPEC’s cut in oil production will be offset by other cash-strapped oil producers continuing to pump and US frackers looking to take advantage of the higher price and their improved efficiency.”

Across the UK, Northern Ireland sells the cheapest petrol with an average of 114.0p a litre while the South East is most expensive at 115.8p. Northern Ireland is also getting the best deal on diesel, typically costing 116.3p a litre, while the South East again is the most expensive with an average of 118.2p.

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