December Fuel Prices

Fuel prices stall as driver tolerance begins to snap

20 December 2007

Soaring road fuel prices have finally stalled after three months of constant rise that saw the cost of petrol rise seven per cent and diesel 11 per cent, says the AA. However, strikes in French refineries and military action on the Turkish-Iraq border suggest that prices could remain volatile in the short-term.

And, with a major union threatening strike action over mileage allowances, volunteer ambulance car drivers in Wales downing their keys over petrol costs and hauliers attempting a fuel duty protest, the tolerance of high prices by some motorists has begun to reach breaking point 1.

The AA's Fuel Price Report for mid-December shows average UK petrol prices have reached 102.81 pence per litre, up 1.3 pence on last month, and diesel 107.95, up 2.51 pence. This is marginally below the all-time peaks of 102.87 pence per litre for petrol and 108.0 for diesel on 6 December. Although prices have levelled off and dipped slightly in the past 10 days, they have started to creep up again.

Latest findings

  • Compared to the same time last year, petrol is 14.6 pence per litre more expensive, adding £7.30 to the cost of refilling a typical 50-litre tank,
  • UK drivers will have spent around £1 billion more in petrol in the last four months of 2007 compared to the same period in 2006,
  • Rural regions have seen smaller rises in the price of petrol and diesel, except for a nearly 3p rise in diesel in Northern Ireland,
  • At 110.4 pence per litre for super unleaded, the West Midlands is the first-ever area of the country to average £5 a gallon for a road fuel,
  • The gap between supermarket and non-supermarket petrol prices remains 1.4 pence per litre, helped by Asda remaining the only retailer to average less than £1 a litre for petrol.

"Just as it seemed that soaring UK fuel prices may have turned the corner to give hard-pressed motorists and businesses some respite and Christmas cheer, prices have started edging up again," says Paul Watters, head of AA Public Affairs.

"In the short-term, Turkish military strikes in Iraq and disruption to French refineries does not bode well for any immediate fall in fuel prices. Looking to 2008, Unison's threat of strike action over mileage allowances and the action taken by Welsh volunteer health-service drivers is more worrying. If fuel prices continue to stay above £1 a litre and the Government, unlike the US, fails to raise tax allowance thresholds on mileage expenses, the UK may see a backlash.

"Our research at the beginning of 2007 showed that drivers were prepared to tolerate prices up to £1.10 a litre, but drivers who provide their own cars for business or voluntary work have a shorter fuse. Cutting back the full allowance's 10,000-mile threshold, currently being reviewed by the Government, could also spell trouble in rural areas."

Notes to editors

1 Fleet News, 6 December 2007: "Strike warning over AMAP rates", and BBC Online, 6 December 2007: "Volunteer health drivers strike".

View the latest AA Fuel Price Report

 

20 December 2007