Fuel Price Update

Petrol hits £5 a gallon

5 January 2010

Average UK petrol prices have risen above £5 a gallon for the first time in 15 months, sending a chilling warning to drivers for 2010.

The average pump price of petrol rose to 110.04p a litre yesterday, with diesel now costing 111.77p. A year ago petrol cost 85.99p and diesel 98.06.

The extra 24.05p-a-litre cost of petrol has added £12.02 to the cost of a tank of petrol and a family with two petrol cars is now paying £52.15 more a month to keep them fuelled.

Of that 24p extra cost, 2.3p came with VAT returning to 17.5% five days ago and 4.51p from fuel duty + VAT increases in April and September.


"The return to 17.5% VAT on 1 January 2010 wasn't evenly applied, with some supermarkets raising prices 2p a litre and others 3p depending on local competition. We were impressed that some independent petrol stations held their prices or undercut local supermarkets during the New Year holiday," says Paul Watters, the AA's head of public affairs.

The fact that petrol sales by supermarkets were 1.8% down in the third quarter of 2009 compared to the same period in 2008 while other retailers boosted their sales 3.0% may indicate more selective buying by cash-strapped drivers.

With further increases in tax due this year and the price of oil back above $80 a barrel, the winter weather isn't the only problem sending a shiver through drivers.

In November, 60% of AA members said they were cutting back family budgets, car use or both to compensate for higher fuel costs and we expect that to get worse.

The Treasury has already predicted that fuel duty income will be £0.2 billion below budget this financial year – retailers who look to take extra from the driver better beware of precipitating falling sales.

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5 January 2010