January 2014 fuel price update

Petrol price refuses to fall below 130p a litre

Petrol price refuses to fall below 130p a litre

Petrol price refuses to fall below 130p a litre

Benchmark average UK petrol prices remain stubbornly above 130p a litre despite many retailers selling it for at least 2p less in most major towns and cities, the latest AA Fuel Price Report notes.

However, ‘postcode-lottery’ towns that have been charging as much as 6p-a-litre more for supermarket petrol compared to neighbouring towns have mostly closed that gap to 3p.

Average UK petrol prices for mid January are down by 0.71p a litre to 130.46p, compared to 131.17p in mid December. Diesel has fallen slightly to 138.24p a litre at the pump, down from an average of 138.61p last month.

Year-on-year, UK petrol pump prices are more than 2p lower and diesel almost 2p cheaper than at the start of 2013. Last mid-January, petrol averaged 132.71p and diesel 140.23.

A comparison of wholesale and pump price movements for petrol in the UK shows that, in four of the past 12 weeks, average weekly wholesale costs fell to a level that would have pulled average UK pump prices down to 130p or below.

Disrupted supplies and bad weather

Unfortunately, disrupted oil supply from Libya and other market factors created enough wholesale price fluctuation to stop the UK’s average petrol pump price falling below the 130p-a-litre mark.

High winds, heavy rain and flooding through December are also expected to have hit pump sales volumes and hindered chances of beating the recent low of 130.13p a litre, which was set in the second week of November.

UK average petrol pump prices started 2013 at 132p a litre, meaning that a sustained 2p litre fall below where the wholesale price started 2013 should have driven the pump price below 130p. Last year, the average pump price peaked at 140.03p in March. The record is 142.48p set in April 2012.

Annual average prices

Throughout 2013, UK drivers have on average paid nearly 1.5p a litre less for their petrol and 1.7p less for diesel than in 2012. Average pump prices throughout the last four years are:

  • 2013: petrol 134.83, diesel 140.72
  • 2012: petrol 136.28, diesel 142.41
  • 2011: petrol 133.65, diesel 138.94
  • 2010: petrol 117.24, diesel 119.60

Even so, drivers remain very sensitive to pump prices. In January 2012, 69% of 20,659 AA members in an AA-Populus poll said that they were reducing car use, other spending to compensate for high pump prices, or both. In December 2013, 60% of a sample of 17,629 AA members were still cutting back because of petrol and diesel prices.

Lower pump prices means that the affordability of petrol and diesel has improved significantly for the better-off

Edmund King, AA president

Cutting back

“Lower pump prices means that the affordability of petrol and diesel has improved significantly for the better-off. In January 2012, 65% of drivers in professional and senior management jobs were cutting back because of high pump prices. This has now fallen back to 52%,” says Edmund King, the AA’s president.

However, for lower-paid groups, pump prices remain tortuous. At the start of 2012, 76% of skilled manual and service workers and 79% of the unskilled were cutting back on car use, other family spending or both to afford to stay on the road. Two years on, 70% in both groups continue to suffer.

Having come so close to seeing the average UK petrol price dip below 130p a litre in the past two months, reaching it is becoming something of a holy grail. But it can be achieved, and probably more.

When the coalition raised VAT to 20% in 2011, the average price of petrol rose to 127.2p a litre - which is more than the cost of petrol in towns with an Asda or maverick independent retailer. Getting other towns to follow suit? Now that would be a real sign of recovery.

Nationally and regionally

Regionally, over the past month, pump prices in London have improved markedly compared to other regions, down 1.2p for petrol and 0.8p for diesel. The capital joins the North as the cheapest parts of the UK for petrol, averaging 130.1p a litre, and is at least a half penny cheaper than anywhere else for diesel, averaging 137.6p.

Drivers in Northern Ireland and Wales face the UK’s highest petrol prices, both averaging 130.9p a litre, while Scotland remains worst in the UK for diesel prices, averaging 139.1p.


(17 January 2014)

Fuel price data supplied by Experian Catalist

Wholesale price data provided by fuelpricesonline.com

 

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