Power bill surges triggered a slump at the pump
A suspicion that record low sales of petrol this spring were a reaction to surging domestic energy bills have been confirmed in a poll of more than 18,000 AA members. The slump at the pump occurred while petrol prices were at their lowest for three years.
A surprising 55% of the AA-Populus motoring panel* said the big increase in gas and electricity prices last winter forced them to choose carefully how they used their cars. Among semi and unskilled workers, 66% had to restrict their car use to balance spending.
In March, petrol prices were at their lowest for three years – below 129.5p a litre, compared to 139.9p a year before and a record of 142.48p in April 2012. However, HMRC figures show that petrol sales in March, after the winter flooding, fell to a record low of 1.367 billion litres. In April and May, when families switched off their heaters and boilers, petrol consumption rose back to a more normal 1.5 billion litres.
New Department of Energy and Climate Change (DECC) statistics show that UK petrol consumption from January to March was also at a record low, down to 3.126 million tonnes – compared to 3.259 million tonnes in the first quarter of 2013, which included the second coldest March on record.
The DECC figures also show how evenly the slump at the pump was felt by fuel retailers. The 4.1% fall in petrol sales in the first quarter was suffered equally by supermarket (-4.0%) and non-supermarket retailers (-4.1%).
Although overall diesel sales were up 3.0% between January and March this year, commercial use accounted for the lion’s share of the increase – up 6.3% on the same period last year, while supermarkets sold 2.5% more and non-supermarkets just 0.4% more.
This is in line with the post-recession traffic recovery which last year saw motorway traffic volumes grow to their biggest ever, overtaking those seen during the boom years of 2007 and 2008. However, traffic on urban roads remains stagnated, last year down 0.1% on main town and city routes and down 1.5% on residential and other minor roads compared to 2012.
The AA-Populus panel survey (10-19 June 2014), offers little prospect of a sustained revival of car use and fuel demand.
A mere 7% of the panel said they were “more relaxed about pump prices and started to use my car more compared to this time last year”.
Another 35% said they were ambivalent, while 57% said they were still in a car travel rut.
More than five years of rollercoaster, rocket-and-feather, and postcode lottery pump prices have left an indelible mark on driving behaviour. The panel respondents revealed that:
when petrol collapsed to almost 130p a litre in mid November, we were staggered to see consumption failing to recover going into December and beyond
Edmund King, AA president
“Throughout 2012, UK petrol consumption rose and fell in line with pump prices – down during the price spikes in the spring (142.48p) and the autumn (140.23p) before recovering each time. In June last year, UK petrol sales recovered to above 1.6 billion litres for the first time in more than a year after the average pump price fell from 140p to 134p a litre,” Edmund King, the AA’s president, explains.
“Sales started to slump again in September as the average cost went back above 138p. But, when petrol collapsed to almost 130p a litre in mid November, we were staggered to see consumption failing to recover going into December and beyond.”
King adds: “The fragility of driver and family budgets is clear to see. In December, 35% of the AA-Populus panel said they would cut back on car use if their domestic energy bills rose 10%. The reality is that 55% now say they have been affected.
“Years of sky-high petrol and diesel prices have taught drivers how to balance their spending by regulating their car use – even when the financial pressure isn’t coming from the pump. Since 2005, the AA has warned of the damage to family budgets from runaway pump prices, but not even we could predict the scale of the backlash.”
(10 July 2014)
* Populus received 18,026 responses from AA members to its online poll between 10th and 19th June 2014. Populus is a member of the British Polling Council and abides by its rules.