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A surge in UK petrol pump prices, adding on average 3p a litre cost since June, shows signs of falling away
A surge in UK petrol pump prices, adding on average 3p a litre cost since June, shows signs of falling away, says the latest AA Fuel Price Report.
Having hit a peak of 137.61p a litre last week, forecourt prices dipped slightly over the weekend. Some non-supermarket retailers are already taking advantage of a 1p to 2p-a-litre dip in wholesale prices over the past three weeks by undercutting local superstore prices.
Even so, at 137.52p a litre, petrol averages 1.74p a litre more than a month ago (135.78p) and is almost 3p dearer than June’s 134.6p price plateau. The average also hides the Jekyll and Hyde nature of UK fuel pricing, where prices in some towns have gone up substantially more – some places passing on the full 5p-a-litre lift in wholesale prices during early July.
This has forced drivers in communities of tens of thousands of people to pay above-average prices for the cheapest petrol locally, even at the supermarket. Cheapest petrol at 137.9p a litre is common in many small market and coastal towns.
The presence of a competitive retailer is dividing some cities. In Exeter, a supermarket and two non-supermarket retailers on the west side engaged in a pump price dogfight at the start of this week, charging 132.9p for petrol. To the east of the city, without a competitive rival, supermarkets were charging 134.9p and 135.9p a litre. In neighbouring towns, Dawlish and Crediton, supermarket petrol cost 136.9p.
The average cost of diesel has risen from 140.24p a litre in mid July to 141.87 now. This dashes hopes of a return to the 11-week period earlier this year (24 April – 10 July) when diesel cost less than the 140p-a-litre average at the start of the year. Diesel now costs nearly 1.5p more than a year ago (140.45p).
Volatility in the oil market, with speculation on the impact of unrest in Egypt, fluctuating US stocks and Chinese economic indicators, helped to lift the oil price above $110 a barrel for the first time since the spring. Closure of Libyan export terminals at the turn of the month provided the final impetus. Meanwhile, swings in the value of the pound against the dollar, from $1.51 to the current $1.55, influenced UK pump prices up and down by up to 1.5p a litre.
At the end of July, the Government raised the prospect of the 5p fuel duty rebate, introduced for island communities in March 2012, being extended to other remote parts of the UK. Understandably, many rural towns that, despite having a supermarket, have regularly been paying 4p or 5p a litre more for fuel than a neighbouring town feel they should be included.
The AA argues, that without wholesale price transparency, drivers cannot tell whether or not they are getting the full benefit of any rebate. This was the case in March 2012 when Scottish islanders saw pump prices rise instead of fall because of a 10p surge in wholesale prices.
Alternatives include providing remote rural communities with grants to help take over or establish their own fuel supply through automated pumps, as has been the case with Applecross in Scotland and other community pumps. These allow the communities to control their pricing and offer discounts to locals or plough back any profits.
It’s probably too soon to expect a price war to break out, but a bit of late summer pump relief for holiday motorists wouldn’t go amiss
Paul Watters, Head of AA Public Affairs
“Recent wholesale price falls and evidence of individual non-supermarket retailers undercutting the superstores suggest the UK fuel price climate is cooling enough for some welcome respite for drivers. It’s probably too soon to expect a price war to break out, but a bit of late summer pump relief for holiday motorists wouldn’t go amiss – so long as it isn’t restricted to towns with competitive supermarkets,” says Paul Watters, the head of AA Public Affairs.
Regionally, London has reinforced its position as the area of the UK with cheapest average price for petrol at 136.9p a litre, 1.5p lower than Northern Ireland (138.4p) which is the most expensive region. Scotland, averaging 142.7p a litre, pays the most for diesel while the East Midlands shares the cheapest slot with Yorkshire and Humberside, both averaging 141.4p.