Compared to mid-August, the average price of petrol has fallen 0.49p to 129.23p a litre
Oil prices at an 18-month low should have driven UK petrol and diesel prices close to the level just after the January 2011 VAT increase. However, a stronger dollar and a pound weakened by Scottish referendum uncertainty has seen average pump prices start to go up again, according to September’s AA Fuel Price Report.
Compared to mid-August, the average price of petrol has fallen 0.49p to 129.23p a litre while diesel is 0.50p cheaper at 133.44p.
Tracking average UK price movements for petrol and diesel since mid August shows:
Over the past fortnight, wholesale petrol has averaged around $950 a tonne. In mid-August, the pound was worth $1.67, which would have made the current wholesale petrol cost 42.9p a litre.
However, with the pound this week valued at $1.62, the current wholesale petrol is 44.3p. With VAT, the monthly difference at the pump is 1.7p.
Had the pound held its mid-August value, the average cost of petrol would have now been around 127.5p a litre – the lowest since 5 January 2011, the day after the VAT increase to 20%.
Not only would that have slashed nearly £1 (93.5p) off the cost of filling a typical 55-litre fuel tank but, with the UK normally consuming 350 million litres of petrol a week, £850,000 a day would have switched from pump sales into potential consumer spending on the high street.
There is a lot of anger and frustration being vented by AA members and other drivers that, although the oil price has fallen significantly, pump prices have started to go up again
Edmund King, AA president
“There is a lot of anger and frustration being vented by AA members and other drivers that, although the oil price has fallen significantly, pump prices have started to go up again. It is a clear illustration of how the value of the pound is critical when buying commodities such as oil and wholesale fuel that are traded in dollars,” says Edmund King, the AA’s president.
“It is also a double-edged sword. Earlier this year, the impact of oil prices rising to $115 a barrel was offset by a strong pound trading at nearly 10 cents higher on the dollar. However, although the dollar has been strengthened by speculation of an interest rate rise in the US, another part of the equation has been the weakening of the pound on speculation of the outcome of the Scottish referendum.
“The impact of the referendum result may be felt by motorists on both sides of the border sooner than they think - perhaps over the following fortnight, depending on whether the effect on the pound is sustained.”
Regionally, the biggest source of complaints about rising pump prices while the oil price falls has come from rural areas, particularly the South West.
East Anglia has also suffered a significant blow by knocking Northern Ireland off its usual position as most expensive in the UK for petrol, respectively averaging 129.7p versus 129.6p a litre.
London joins Yorkshire and Humberside as the cheapest for petrol, both averaging 128.9p a litre.
East Anglia is also enduring the highest average price for diesel, at 134.0p a litre, while the North West and Yorkshire and Humberside enjoy the cheapest, both averaging 133.0p a litre.