April 2015 fuel price update

Oil price falls, pump prices rise, politicians say nothing

Filling a petrol tank goes up 75p in a month, and £3.50 since February

Filling a petrol tank goes up 75p in a month, and £3.50 since February

Even though drivers contribute £58 billion* or almost 10% of the Treasury’s entire £582.6 billion UK tax-take, the need for fair pricing on UK forecourts has so far been largely ignored by politicians seeking the votes of the UK’s 35 million motorists.

The latest AA Fuel Price Report shows that average petrol prices have risen from 111.92p a litre in mid March to 113.29p in mid April, a 1.37p increase which adds 75p to the cost of filling a typical 55-litre petrol tank.

Diesel’s average price has also risen, adding 0.64p to the cost of a litre over the past month - up from 118.19p in mid March to 118.83p in mid April.

  • Filling a petrol tank goes up 75p in a month, and £3.50 since February
  • Retailers admit to pumping up diesel prices
  • Parties promise energy price transparency in the home, but not at the pump

5% fall in price of oil

In contrast, though, the cost of oil feeding into pump prices has fallen. In the first two weeks of March, oil averaged $58.5 a barrel. In the opening fortnight of April, it has fallen to $55.7 or almost 5%.

This has angered petrol drivers, although fuel price transparency would have explained why oil and pump prices have gone in opposite directions. In the first two weeks of March, the wholesale price of petrol averaged $608 a tonne but that had risen to $613 in the first fortnight of April. And, with the value of the pound dropping from $1.511 to $1.481, the $2.8-a-barrel fall in the oil price turned into a 1p-a-litre increase at wholesale level.

For diesel drivers, transparency would have exposed a major price distortion at the pump, adding more than £3 to the cost of filling up a diesel car and £4.80 for a diesel van. 

Higher margins on diesel

Last week, petrol retailers admitted they are adding an average of up to 6p to the price of a litre of diesel:

“… the independent retailer often selling up to 4 grades of road fuel, has to obtain a financially acceptable average margin to ensure that the business is producing sustainable returns. Currently the margin available on petrol is extremely low - and so higher margins may be taken on diesel after adjusting for the severe margin depressing effect of fuel cards to the independent retailer sector.”

Petrol Retailers Association**
(7 April 2015)

One of the benefits of wholesale price transparency is to allow diesel drivers to see how the price of their fuel compares with the price of petrol at wholesale level, and whether that difference is reflected at the pump. Clearly, the differential at the pump is unlikely to mirror exactly the differential at wholesale level.

Manifestos promise action and transparency on domestic energy bills, but nothing on road fuel price transparency

Edmund King, AA president

Blank cheques

“Cars are like blank cheques for whoever feels the need to balance the books by plundering drivers’ pockets. Motorists prop up the Treasury to the tune of 10% of the UK’s total tax-take, and now the fuel retailers are taking £3 a tank extra on diesel to steady their finances,” says Edmund King, the AA’s president.

Rural duty rebates

“Manifestos promise action and transparency on domestic energy bills, but nothing on road fuel price transparency. At the end of May, 17 rural areas will get a 5p fuel duty rebate and politicians will boast of the achievement as they try to get elected on 7 May. The fact of the matter is that, without pump price transparency, the voters in those areas have no way of knowing if they will get the full rebate or not – as happened in Shetland in 2012."

AA Motorists’ Manifesto

The AA Motorists’ Manifesto shows that the cost of motoring is drivers’ second biggest concern. Petrol prices have risen 7p a litre since the start of February, adding £3.50 to the cost of filling a petrol tank and £14 to the monthly bill of a two-car family, yet they have been largely ignored by politicians.

A commitment to pump price transparency would be a good start for a new government, and give some return for the billions of pounds that 35 million UK drivers contribute to keeping this country running.

National and regional

Across the UK, the cheapest petrol, averaging 113.1p a litre, is being sold in London, the South East, and Yorkshire and Humberside. Scotland sells the most expensive petrol, averaging 113.8p a litre. Diesel in Northern Ireland averages the lowest at 117.7p a litre, while Scotland is highest, at 119.6p.

(17 April 2015)

Fuel price data supplied by Experian Catalist

Wholesale price data provided by fuelpricesonline.com

* UK voters with cars and other vehicles pay more in fuel duty (£26.9bn) alone than UK firms and companies pay in business rates (£26.8bn) and the equivalent of 97.5% of what is received through council tax (£27.5bn, according to the Budget Report 2015, Table C.3, page 110: Current Receipts - OBR). Other motoring taxes raise another £6.1bn in vehicle excise duties, and a further £25bn from VAT on fuel and car sales, company car tax and insurance premium tax. Of the £582.6 billion raised in UK taxes last financial year, almost 10% came from motorists.

These sums do not include: VAT from car repairs and other motoring-related expenditure, income to councils from parking charges, resident parking permits and penalty charge notices (parking and moving traffic offences), congestion charges, and bridge tolls. Dartford Crossing, alone, generates £90 million a year in income. Bus lanes in Scotland have generated £10 million in penalty charges.

** http://www.rmif.co.uk/associations/pra/press-room/press-releases/pra-responds-to-rac-statement-24-03-15/?m=0