June fuel price update

Pump prices back on the rise

17 June 2011

Petrol and diesel prices are back on the rise after a break that lasted less than a month.

Petrol and diesel prices are back on the rise after a break that lasted less than a month.

The latest AA Fuel Price Report shows that, although mid-June's average UK petrol price is almost penny a litre lower than a month ago, it has gone up a third of a penny in the past week.

Petrol in the UK currently averages 136.07p a litre, down 0.86p on mid-May levels. The stock market 'flash crash' in oil prices at the start of May took petrol down from a record high of 137.43p on 9 May to 135.75 on 5 June, before prices started going up again.

Diesel car owners enjoyed a greater fall in costs before prices started to rise again. Diesel now averages 139.77p a litre at the pump, down 1.72p on mid-May. Having hit a record of 143.04p a litre in the second week of May, the fall bottomed out at 139.34 on 5 June, before rising 0.43p to where it is now.

Short changed

Despite the fall in prices since early May, the AA believes that petrol car drivers have been denied much of the saving that the crash in oil price, from $126 to below $110 could have allowed. This has short-changed drivers by around 2p a litre or a £1 a tank.

  • Back in March when the cost of Brent crude stagnated at $115 a barrel, UK average petrol prices levelled off at 133.5p a litre – before the Budget cut 1p off fuel duty on 23 March.
  • Throughout May when Brent crude slumped back to $115 and for some time was much lower, the average UK price of petrol (135.75p) remained at least 2p a litre higher. The dollar-pound exchange rate barely changed during the two periods.

Comment

Had the full potential 4p drop in petrol price – from May's all-time high of 137.43p to the 133.5p seen in March when oil initially settled at $115 – been passed on it would have saved a two-car family £8.49 over the month and possibly improved Tuesday's inflation figures.

"Without transparency in the oil and fuel markets and a regulator to ensure fair prices, drivers, consumers and the nation are open to being ripped off by whoever wants to make an extra buck," says Edmund King, the AA's president.

EU lobbying

On 19 May, the FIA sent a letter (co-written by the AA with other European motoring clubs representing millions of motorists) to the EU's competition commissioner. It asked him to investigate the return to record wholesale prices with oil 10-20% cheaper than before, speculation and transparency in oil and fuel markets, and price reporting.

The apparent failure to pass on the full benefit of early May's oil mini-crash adds more weight to the FIA's demands.

Download a copy (PDF) of the letter to the EU

Supermarkets

Closer to home, supermarkets this week revealed how high pump prices have already hit sales throughout their stores.

On UK forecourts, fuel retailers who were slow to react to May's drop in market prices have caught up with supermarkets that seized the early chance to lure customers with lower petrol prices.

Jet and Shell once again shadow the UK average of Tesco, who with Morrisons are beginning to reflect rising petrol prices.

Asda has snatched back its position as the UK's cheapest petrol retailer in dramatic style, now almost 1.5p cheaper than the UK average of its nearest rival. Its setting of forecourt prices that don't end in .9p, to gain an edge on price-matching local rivals, is particularly welcome and will hopefully spread to other retailers.

Regional

Transparency in fuel markets would particularly benefit Northern Ireland where average petrol prices fell by just 0.4p a litre over the past month to 137.4p, making it the most expensive region, while diesel price movements were more in line with the UK average.

Scotland is the most expensive place to buy diesel, now averaging 140.5p a litre. Yorkshire and Humberside retains its position as the cheapest region for petrol at 135.4p a litre and diesel at 138.9.