Lowest summer petrol price for six years fails to reinvigorate holiday driving
While petrol consumption in the US has shot up this summer and American motorists drive more miles than ever before, the UK’s motoring season got out of the garage but never left the driveway, AA analysis of new official statistics reveals.
UK fuel consumption figures released by HM Revenue and Customs on Friday show that petrol consumption flat-lined at around 1.475 billion litres a month from May to July. This is lower than last summer when the petrol price averaged as much as 131.70p a litre, compared to a maximum of 117.28p this summer. Over the weekend, petrol averaged 113.49p a litre – the lowest for a holiday season since 2009.
UK petrol consumption
US gasoline demand
In the US, drivers travelled a record 987.8 billion miles during the first four months of 2015, topping the previous record of 965.6 billion miles set in the first four months of 2007. This was helped by petrol prices falling from $3.69 a gallon in June last year to $2.12 in January, to $2.72 last week.
In the UK, despite petrol pump prices 11% lower than a year ago and below 2008’s 119.70p-a-litre peak, car traffic remains below 2007 and 2008 pre-financial-crisis levels. There is more car traffic on motorways and small rural roads, but 5% less on urban A-roads (42 v 40bn vehicle miles), 2% less on rural A-roads (70.6 v 69.2bn vehicle miles) and 4.5% less on urban minor roads (56.2 v 53.6bn vehicle miles) than the peaks in 2007.
It is debatable whether pump prices falling to £1 a litre is the psychological trigger needed to get British drivers using their cars as much as they used to. For starters, US demand is boosting the wholesale price of petrol making it harder for the £1 litre to arrive at UK pumps this summer. A stronger pound helps but refiners have been enjoying higher margins from production.
In the second and third week of January, when oil averaged $46.7 a barrel, commodity petrol was worth around $460 a tonne and diesel $480. With the pound valued at around $1.51, the cost of petrol to the retailer averaged 23.5p a litre and diesel 28p.
Last week, oil averaged $46.2 a barrel with petrol at around $560 a tonne in the commodity market and diesel at $472. A stronger pound, worth $1.565, helped push wholesale petrol down to 27.5p a litre and diesel to 26.5p. But this still leaves wholesale petrol supplied to the retailer 4p a litre more expensive than in January when oil also fell to $45 a barrel.
With the sun and heatwaves in June and July, the UK looked set for a bumper motoring summer. But, with UK petrol consumption at a level normally associated with winter months, the season barely got going. This is astonishing, particularly with petrol 14p a litre cheaper than a year ago
Paul Watters, AA head of policy
“With the sun and heatwaves in June and July, the UK looked set for a bumper motoring summer. But, with UK petrol consumption at a level normally associated with winter months, the season barely got going. This is astonishing, particularly with petrol 14p a litre cheaper than a year ago. Meanwhile, US drivers have set new records for the amount of motoring they have done,” says Paul Watters, the AA’s head of motoring policy.
“Perhaps it is other budgetary pressures on families, although the Office of National Statistics last week reported “the longest period of sustained year-on-year growth” in retail sales. That leaves the scourge of the sudden surge at UK fuel pumps, following yet another leap in petrol prices – from a low of 106.39p in February to 117.28p in late June.”
“If UK pump prices fall to £1 a litre, and it’s a big ‘if’, there is no guarantee that this will bring about a last-minute revival in UK summer motoring. The only thing that UK drivers know they can rely on is that, for every crash in pump prices, there will be a surge afterwards – hardly encouragement to use the car more.”