March fuel price update

Record prices and Chancellor wipes out summer motoring savings

27 March 2012

Record prices and Chancellor to wipe out summer motoring savings

Record prices and Chancellor to wipe out summer motoring savings

UK petrol pump prices are already 1p a litre above last year’s record and diesel nearly 2.5p a litre higher than last May’s peak. These and the impending fuel duty increase will wipe out any saving and respite UK motorists could have expected from warmer weather motoring, March’s AA Fuel Price Report highlights.

On average, the cost of petrol has risen to 138.50 pence a litre and diesel 145.45, both all-time highs and an increase over the month of 3.5p a litre for petrol and 2.65p for diesel. Last year, fuel prices set records of 137.43p for petrol and 143.04p for diesel.

Warmer weather and more daylight reduce a car engine’s winter workload and improve fuel efficiency by at least two miles per gallon. For a petrol car with an average fuel consumption of 31 mpg or 6.8 miles per litre, a 2 mpg improvement adds 24 miles to the range of a 55-litre (12-gallon) fuel tank – equivalent to a saving of 3.5 litres, £4.85 a tank or 8.8p a litre.

Infuriatingly for drivers, the 6.25p-a-litre increase in the price of petrol since the start of the year has slashed much of the saving and the Treasury’s 3.624p-a-litre fuel duty increase with VAT on 1 August will finish the job.

Overall, current record prices for petrol and diesel have:

  • in the past month, added £1.75 to the cost of refuelling a typical petrol tank and £2.12 for an 80-litre commercial van diesel tank,
  • since the start of the year, added £13.27 to the monthly fuel costs of a family with two petrol cars,
  • compared to a year ago, diverted an extra £5.78 million a day from high street and other consumer spending into fuel sales. Compared to March 2010, £23.21 million more a day is now lost to petrol and diesel.

Confirmation of a fuel duty increase in the Budget will condemn poorer drivers in rural areas to suffer disproportionately when the tax rise comes into force on 1 August. According to Department for Transport figures, a rural resident drives on average 5,618 miles, compared to the average of 3,415 **.

This year’s 6.25p-a-litre rise in petrol costs is already adding £51.64 to the rural driver’s annual fuel bill, and the 3.62p-a-litre duty + VAT rise from 1 August will add a further £29.91. Totalling £81.55, this compares with an increase of £49.57 for the average UK driver.

Tax on fuel is not equitable and hits people harder because of where they live and how mobile they need to be

Edmund King, AA president


“Tax on fuel is not equitable and hits people harder because of where they live and how mobile they need to be. Yes, rich car owners with bigger-engined vehicles pay more for their indulgence because of higher vehicle excise duty and fuel consumption, but poorer drivers suffer disproportionately,” says Edmund King, the AA’s president.

“Those who live in rural areas, those that have had to move further away to find affordable housing or those whose family budget is on a knife-edge because of daily travel costs to nursery school, childminders and work face a greater and unfair burden.

“Rather than pushing ahead with the fuel duty increase, the Treasury would do better to freeze fuel duty and work on a fuel price stabiliser that is relevant to current record prices. If not, the Government will see not only more people claiming benefits as rising travel costs discourage work but get less tax as motoring-dependent businesses go bust and lay off workers.”

Clear illustrations of business jitters came recently with a supermarket boss warning of the impact of high fuel prices on other consumer spending. A day earlier, a Cornish holiday cottage firm announced that it was offering guests money-off fuel vouchers for fear that the higher cost of driving to holiday destinations may put off visitors. Even a 10% reduction in visitor numbers will have a ‘massive’ impact, it said.

Frustration with fuel price differences between towns continues to grow as Aylesbury councillors called on its local supermarket to bring its prices more in line with what was being charged in neighbouring towns. This follows on from the rural affairs minister, Richard Benyon, posting local fuel prices on his website to encourage constituents to shop around for cheaper fuel in the Newbury area.

Regionally, Yorkshire and Humberside regained its position as the cheapest region for petrol, at 137.9p a litre. Northern Ireland remains the most expensive at 139.2. A faster rise in the cost of diesel, now averaging 145.9p a litre, has left Wales jointly most expensive with Northern Ireland. Yorkshire and Humberside, the cheapest for diesel at 144.7p a litre, is the last UK region to sell the fuel at less than 145p a litre.  

The £7 gallon has at last arrived at a main fuel station, with an M4 service station this week charging 153.9p a litre for diesel.

(27 March 2012)

** National Travel Survey – miles per person per year as a car/van driver

Fuel price data supplied by Experian Catalist