April fuel price update

If you thought the panic buying was bad ....

18 April 2012

Average petrol prices in the UK set a new record this week

Average petrol prices in the UK set a new record this week

Average petrol prices in the UK set a new record this week as a month of falling oil prices failed to be reflected in wholesale prices across northern Europe, according to April’s AA Fuel Price Report.

After last week’s brief halt in the 14-week rise in pump prices, the UK’s average cost of petrol has returned to record levels at 142.48p a litre. Diesel, at 147.88p a litre, is just five-hundredths of a penny off the record set last week.

Petrol has risen 10.23p a litre and diesel 7.32p since pump prices started their relentless climb at the start of the year, adding £21.72 to the monthly petrol cost of a two-car family. In the past month alone, petrol has gone up 3.98p a litre and diesel 2.43p. A year ago, petrol cost 135.29p a litre and diesel 141.60p.

Oil price tumbles

Since mid March, the oil price has tumbled more than four per cent yet NW Europe wholesale petrol has remained above the $1200-a-tonne benchmark that set record pump prices in July 2008 and May 2011 - the pound being significantly stronger on those previous occasions. In July 2008, Brent crude oil peaked at $147 a barrel while, in May 2011 and this year, oil peaked at $125 - $126, which is a 14% reduction in the raw material cost.

Falling sales

UK petrol sales in 2011 fell by 880 million litres (4.6%), or the equivalent of 17.6 days’ volume, compared to 2010, latest government statistics show. From October to December last year, fuel vouchers helped supermarkets to hold back the tide of falling demand, increasing petrol sales by 0.2% compared to the same period in 2010. Meanwhile, other fuel retailers suffered an 8.4% drop in petrol sales.

Year-on-year diesel retail sales were up by 465 million litres (2.9%), but much of that increase resulted from companies switching from fuel kept in depots to buying it from forecourts. Commercial diesel sales to depots fell by 164 million litres (1.8%) in 2011.

Panic buying

Panic-buying in response to the threat of a tanker drivers’ strike at the end of March placed an intolerable strain on many families, who felt the need to fill their tanks to the brim when they would normally buy far smaller amounts. A typical 50-litre petrol refill now costs £71.24, which is £5.12 more than at the start of the year. It is also as much as a family with two adults and children spends on food and non-alcoholic drink each week, according to government statistics.

Panic buying in March forced some cash-strapped families to spend far more on fuel than their budgets could bear. Filling up a 50-litre tank costs more than some families spend on food each week.

Edmund King, AA president

Comment

“Panic buying in March forced some cash-strapped families to spend far more on fuel than their budgets could bear. Filling up a 50-litre tank costs more than some families spend on food each week. This panic buying masked a more persistent threat further up the fuel chain,” says the AA’s president Edmund King.

“Speculator-driven oil prices have crashed petrol demand, down 20% on pre-credit crunch levels in the UK and back to 2001 levels in January in the USA, resulting in refinery closures on both sides of the Atlantic. Now stock market speculators are gambling on a ‘tight’ wholesale gasoline market they helped to create. This is despite gasoline inventories in North West Europe being more than 8% bigger than this time last year and pump prices in the US falling.

“With both the International Energy Agency and OPEC saying last week that the global oil market is ‘well-supplied’, the pressure to maintain petrol wholesale prices at or just below record levels and kill even more consumer demand is absurd and incomprehensible. To help the 35 million UK drivers, the government should address the current destructive tendencies in the oil and road fuel markets. Greater transparency would be a good start.”

Regional

Across the regions, the average price of petrol in Northern Ireland (143.9p a litre) has surged ahead of other parts of the UK. Whereas, last month, it was a fifth of a penny more expensive than the next most expensive UK region, the gap has leapt to a full penny (Wales 142.9p). Yorkshire and Humberside (142.3p) has surrendered its position as the cheapest region for petrol to Scotland (142.2p), while even London (142.3p) matches northern England. Whether this is still the fallout from the panic buying and fuel supply disruption in late March will become clearer with next month’s report.

The cost of diesel across the regions retains a more usual pattern, with Northern Ireland, at 148.2p a litre, marginally the most expensive and Yorkshire and Humberside the cheapest, at 147.3p.

(published online 24 April 2012)

Fuel price data supplied by Experian Catalist