10p-a-litre petrol price hike begins to break driver finances
A further 3p-a-litre increase in the price of petrol over the past month has boosted the spike since early February to more than 10p a litre or £5 a tank, the latest AA Fuel Price Report reveals.
EU retail sales figures released this month indicate that trade at petrol stations across the Continent has already begun to crash, flipping from a 4.5% year-on-year increase in February to a 1.0% fall in March. In the UK, HMRC statistics show that petrol consumption in March had tumbled to its lowest on record.
The UK’s average price of petrol has risen from 113.29p a litre in mid April to 116.42p now. This is 10p a litre higher than on 1 February, when the recent price collapse bottomed out at 106.39p.
Diesel has also become dearer, up from an average of 118.83p a litre in mid April to 120.70p in mid May. Although rising less quickly than petrol, the price of diesel is still on average 3.5p a litre more expensive than it should be. Over the past fortnight, the litre cost of diesel to the trade has been just half a penny higher than petrol’s.
The election result helped to buffer some of the surge in pump prices. The currency markets reacted positively by adding five cents to the value of the pound against the dollar, the currency used to trade oil and wholesale fuel. On election day, the pound was worth $1.52, but rose to $1.57 afterwards.
With petrol trading at around $700 a tonne, the five cent improvement has headed off a further 1p rise to the wholesale cost of a litre of petrol, from 34.5p down to 33.5p (before VAT). A month ago, the pound was worth slightly less than $1.50 – an exchange rate that would have valued the wholesale price at more than 35p a litre.
The 5p-a-litre rural duty rebate comes into force on 31 May. It applies to 17 remote rural areas in the Highlands, Argyll and Bute, Northumberland, Cumbria, North Yorkshire, and Devon*. With VAT, the reduction at the pump should be 6p a litre.
Although a more stable wholesale price in recent days should allow the full benefit to be obvious at the pump initially, the AA continues to argue that wholesale versus pump price transparency would prove to drivers that the rebate had been passed on in its entirety.
The Tesco Fuel Save scheme, offering money off fuel from accumulated in-store spend over a month, has been extended for a further two months, to the end of July. Popular with drivers, Tesco claim that two million people have taken advantage of the scheme.
price surges at the pump and on the billboards trigger a negative response from drivers
Edmund King, AA president
“Despite negative inflation in April, warning signals coming from the EU and the United States indicate that the $20-a-barrel leap in the price of oil since the beginning of the year is once again influencing the car-use and fuel-buying behaviour of drivers,” says Edmund King, the AA’s president.
“Compared to May 2014, when petrol averaged around 130p and diesel 136p a litre, car-dependent families should be feeling much better off. However, as the AA has pointed out in the past, price surges at the pump and on the billboards trigger a negative response from drivers.”
A 10p-a-litre hike since February echoes the price spikes of 2012 and 2013 and UK drivers may have responded as they have in the past by cutting back on car use
Edmund King, AA president
King adds: “A 10p-a-litre hike since February echoes the price spikes of 2012 and 2013 and UK drivers may have responded as they have in the past by cutting back on car use. March’s slump at the petrol pump also happened last year and this may be a reaction to domestic energy winter bills arriving on the doormat, forcing consumers to squeeze other areas of family spending.
“However, if official fuel consumption and retail sales figures for April reinforce a worsening picture, it will show a more sustained driver backlash to rising forecourt prices. Once again, this will be down to commodity market speculation pushing up oil and wholesale prices artificially – particularly infuriating for drivers and business when data from OPEC and the International Energy Agency show the world has been pumping 1.5 million more barrels of oil per day than it consumes.”
Across the UK, Northern Ireland enjoys the lowest average price for petrol, at 116.0p a litre, and diesel, averaging 119.4p. Scottish drivers pay most for their fuel, averaging 117.0p for petrol and 121.3p a litre for diesel.
(22 May 2015)
Fuel price data supplied by Experian Catalist
Wholesale price data provided by fuelpricesonline.com
* Rural fuel rebate scheme extension – The Council of the European Union has fully approved the government’s application to extend the rural fuel duty rebate scheme to 17 areas of the UK mainland. The scheme will be implemented on 1 April 2015 and will enable retailers in eligible areas to register for a 5 pence per litre fuel duty discount. (Budget Report, March 2015).
The implementation of the rebate was delayed for two months, to 31 May 2015:
The 17 areas which will benefit from the price cut are: