January Fuel Price Report

Diesel 3.5p short of £5 gallon as supermarkets' xmas cheer ends

18 January 2008

Average UK diesel prices have closed to within 3.5 pence of the £5 gallon - the first time ever for a mainstream UK fuel, the latest AA Fuel Price Report reveals. Diesel now costs a record 109.24 pence per litre while petrol has also reached a new all-time high, averaging 104.28 pence per litre across the country.

Pressure from volatile oil prices, rising from $90 a barrel to around $98 and back down over the past month, has maintained price rise momentum. However, a sudden spurt in the cost of petrol and diesel during the second week of January came from supermarkets easing off the festive brakes on fuel prices. On average, supermarket petrol has risen 1.78 pence per litre and diesel 1.71 in the past month, compared to 1.36 and 1.19 respectively for the non-supermarket retailers.

Overall, from mid-December to mid-January, the average cost of petrol has risen 1.47 pence per litre and diesel 1.29. This has added £1.58 to the monthly fuel cost for a typical petrol car owner. Compared to the same time last year, when petrol cost 87.49 pence per litre, the typical family with two cars is now paying £35.99 more to keep them fuelled.

Although the price of diesel hasn't risen as sharply as petrol in recent weeks, the litre-price is three-quarters of a penny short of the crucial £1.10 mark that signifies a £5 gallon. None of the UK regions has breached this mark, although Northern Ireland is on the edge.

The gap between the price of petrol and diesel, at 4.96 pence per litre, is not as large as last year. However, among the 24 other European countries surveyed for the AA Fuel Price Report, diesel costs less than petrol in 15 of them.

"A fall in the price of oil towards $90 a barrel in recent days hints at some easing of prices heading into February. However, the sensitivity of oil markets means that further increases can't be ruled out. Indeed, the US government's Energy Information Administration is predicting even higher petrol prices in the spring," says Paul Watters, head of AA Public Affairs

"Diesel drivers are being punished twice: paying a higher purchase price for their more fuel-efficient vehicles and now a dramatically high price for the fuel. They will be asking themselves was diesel a wise choice after all and where this is all going to end. For most, there is no alternative as the fuel economy benefit is still significant for business and higher mileage drivers - but they look with envy at their continental neighbours where diesel duty is usually significantly lower than in the UK."

Northern counties and Scotland remain the cheapest regions for petrol, with Northern Ireland, East Anglia and London among the most expensive. Only the North West and Yorkshire and Humberside average below £1.09 for a litre of diesel.

View the full AA Fuel Price Report.

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18 January 2008