March Fuel Price Update

UK petrol prices soar 4p a litre closer to a new record

19 March 2010

UK petrol prices soar 4p a litre closer to a new record

Average UK petrol prices have shot up 4p a litre in the past month, taking them to their highest since late July 2008 – the beginning of the great fuel price collapse, the AA Fuel Price Report for March reveals.

Soaring wholesale prices, an increase in duty on 1 April and the end of the subsidy for biofuel producers could push the cost of petrol close to 124p a litre just after Easter.

Latest fuel prices show that the cost of petrol has risen from 112.10p a litre in mid February to 116.09 now, 3p of that in the past fortnight. The price of diesel has risen to 116.87p a litre, up from 113.84p a month ago.

If price increases are as bad as we fear, they will become an important issue in the coming election Analysis of average UK prices by retailer brand indicates that most supermarkets are so far managing to hold petrol prices below an average of 113.5p a litre while many of their rivals have let their prices rise higher. The exception is Jet with an average UK petrol price that still undercuts one of the major supermarkets.

Diesel prices that have increased at a slower rate are now within a penny of the average petrol price for the first time since September 2009. The price gap could close further as the 17% increase in petrol wholesale prices takes effect.

The 4p increase in petrol prices since mid February has added £2 to the cost of filling a typical 50-litre petrol tank and added £8.49 to monthly cost of fuel for a family with two petrol cars.

If the rise in petrol wholesale prices, from around $680 a tonne a month ago to approaching $800 now, is passed on to the pump, the resulting extra 4p increase will lift prices above the all-time high of 119.7p a litre (July 2008).

A 3p increase in fuel duty and VAT on April 1, together with another 1p rise from the loss of the subsidy on biofuel due the same day, could lift the price of petrol to 124p a litre.

That overall 8p increase on the current pump price will increase the monthly fuel spend for a family with two petrol cars from £246.50 to £263.30 – yet another £16.80 hole in their monthly budget and potential consumer spending.

Comment

"With Easter approaching, a new trinity of wholesale price rises, fuel duty increase and lost biofuel subsidy will descend on UK drivers to make sure that any bank holiday motoring fun and relaxation will tempered by a steep rise in the cost of refuelling," says Edmund King, the AA's president.

"If price increases turn out as badly as we fear, they will become an important issue in the coming election. The AA has 15 million members, including families, people on fixed incomes, lower wage-earners who rely on cars to get to where they can find work, young drivers who can only afford to stay at home and have to drive to their first job, volunteer drivers and many other types. The "AA voter" will be tuned in to what the political parties have to say about record fuel prices and their impact."

Across the regions, Yorkshire and Humberside continues to be the cheapest area for both petrol and diesel, respectively 115.0 and 115.9p a litre. Northern Ireland (116.5p), which has seen some of the lowest fuel price rises in the month, has handed the title of most expensive area in the UK for petrol to London (116.7p) but is still dearest for diesel (117.6p).

Factfile

View the full AA Fuel Price Report »

UK pump price data provided by Experian Catalist

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19 February 2010