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Scorching pump prices hit summer drivers
Yet another surge in wholesale petrol prices threatens to burn a hole in the pockets of holiday motorists and scorch the green roots of consumer recovery, warns the latest AA Fuel Price Report. A $100-a-tonne increase in the cost of petrol across NW Europe, combined with a weaker pound, heralds a potential 5p increase in pump petrol costs.
On average, with UK petrol prices up from 134.61p a litre in mid June to 135.78p now, more than a penny has already fed through to the pump.
However, that hides the fact that fuel stations in many areas have wasted little time in passing on the higher cost. ‘Usual suspects’ like Lewes, Newark/New Ollerton, Dover, and other market and coastal towns are already charging 5p a litre or £2.50 a tank more for petrol than neighbouring towns. On the flipside, two supermarkets remain cheaper on average than a month ago.
The pump price of diesel, which averaged 139.16p a month ago, has also risen more than a penny to 140.24p. With the wholesale cost of diesel in NW Europe up around $40 in the past fortnight, the current likelihood of a price surge is remote.
Apportioning blame for the surge in the price of petrol, the following is clear:
Oil – the cost of Brent crude has risen from $100 to $109 since the last week of June.
Pound – its value has fallen from $1.56 in mid June to $1.51 now. Whereas, a month ago, wholesale petrol at $1000 a tonne would have equated to 48.38p a litre before tax, the weaker pound increases the cost to 49.98p a litre.
Product – the wholesale price of petrol across NW Europe reached $1000 a tonne last week, having fallen below at the beginning of April.
After the price of petrol stabilised at around 134.6p a litre through much of this June, and weeks were filled with beautiful weather and sporting excellence, it was perhaps inevitable that oil and fuel market speculators would cast a black cloud over what was promising to be a glorious summer
Edmund King, president of the AA
“Last week’s OPEC oil market report painted a picture of improved summer petrol consumption in the US and Europe, but stocks remain significantly larger than last year – 9.3% up in NW Europe. The report refers to ‘slack demand in Europe and a slow start to the US summer driving season’,” says Edmund King, the AA’s president.
“OPEC summarises the gasoline market in the Atlantic Basin as ‘losing ground due to limited demand on the Atlantic Coast which has not so far provided the strong boost that was seasonally expected’. And therein lies the rub – market speculation versus consumer reality.
“US regulator data shows that betting on rising oil prices is at its highest since May 2011 – and we all know how that ended, oil crashing from $125 to $108 a barrel in the June. Meantime, UK petrol consumption fell more than 5% as cash-strapped drivers cut back and RPI inflation was running above 5%.
“After the price of petrol stabilised at around 134.6p a litre through much of this June, and weeks were filled with beautiful weather and sporting excellence, it was perhaps inevitable that oil and fuel market speculators would cast a black cloud over what was promising to be a glorious summer.”
Should the full 5p-a-litre potential increase in petrol prices hit UK forecourts, a family from Hounslow heading off on holiday in a typical family car to Plymouth will pay £2.90 more for the return trip than it would have done in June. A survey of last year’s visitors to Cornwall found that 26%** of visitors came from London and the South East. For every 100,000 trips to Cornwall from London and the South East, with 86% of visitors coming by car, the petrol price spike could siphon nearly £250,000 away from the tourism industry into the pockets of the fuel industry.
Elsewhere regionally, London, joined by the North West, has resumed its position as the cheapest part of the UK for petrol at 135.5p a litre. Northern Ireland, although enjoying the smallest price rise over the past month, is still the most expensive region for petrol at 136.6p.
Scotland and East Anglia share the position of most expensive areas in the UK for diesel, both averaging 140.8p a litre, while the North West again bags the cheapest spot with 139.7p