UK drivers are paying an average of £ 1.64 per liter of unleaded. With greater pressure on diesel prices, some UK drivers will have to pay even more – the latest RAC figures reported an average diesel cost of £ 1.77 per liter.
However, many motorists are already paying significantly higher prices per liter than the average, with reports of diesel and premium grade petrol prices breaking the £ 2 per liter barrier by large margins in some forecourts.
According to the RAC, last week’s cut in fuel tariffs should have reduced the cost of filling an average family car with gasoline from £ 92 to £ 89, or £ 98 to £ 95 when filling diesel. Even those marginal gains have not been met, as retailers appear reluctant or slow to cut full tariffs.
The RAC said drivers would be “disappointed that prices are not lower”, but retailers may have to wait for new deliveries to buy at lower rates, which could take some time to meet the cut.
Even if the tariff cut goes entirely to the drivers, its potential impact on prices has been described as going down to sea.
When the Chancellor of the Exchequer announced tariff cuts last week, RAC Energy spokesman Simon Williams said: Causing stress. Just last week, the average cost of a liter of petrol rose 3.5p and the price of diesel rose 5.5p.
The RAC also noted that ensuring that all operators benefited fairly and fully from the reduction of fuel tariffs depended entirely on retailers reducing their prices, rather than retaining extra profits. Prior to the budget announcement, the RAC had instead called for a reduction in VAT, which would ensure relief to drivers.
Looking ahead, experts told a parliamentary selection committee on March 14 that the price of a barrel of oil is likely to rise further, as countries scramble to replace supplies from Russia. Nathan Piper, an oil expert at financial services firm Investech, told MPs: “If tougher measures are imposed on Russia, and 5 million barrels per day are really removed from the market, there will be no real limit to oil prices.”
Prime Minister Boris Johnson traveled to the Middle East on a mission in mid-March to expand the taps to countries like Saudi Arabia.
Why are diesel and petrol so expensive?
Russia is one of the largest producers of oil and gas in the world, so any interruption in its production process has a global impact.
Russia has launched a full-scale invasion of Ukraine and is facing international sanctions, with significant disruptions to supplies. Russia produces 4.5 million barrels of oil per day, and Saudi Arabia alone produces more.
So far, sanctions against Russia have targeted banks and alligators, rather than the country’s energy sector, but factors such as the suspension of Germany’s Nord Stream 2 gas pipeline will affect the energy market as a whole. Russia’s economic sanctions have the potential to reduce oil exports to Europe, and experts suggest that Saudi Arabia’s oil fields could fight to increase production enough to counter such measures.
“OPEC, the cartel of oil producers, is already struggling to meet its output targets as demand for crude rebounds following the relaxation of lockdown restrictions. This has pushed up prices, with analysts warning that there is limited potential to increase supplies if Russia is affected by the embargo, “the Financial Times reported.
What is the price of fuel in the UK?
Fuel prices can be divided into three parts; Taxes imposed by the government, drilling, refining and transportation costs and the profit margins of fuel companies.
For petrol, diesel and bioethanol, the government receives about 65 percent of the total expenditure through fuel duty and value added tax (VAT). Fuel tariffs represent a fixed price for fuel – it stays the same no matter how much the overall oil price fluctuates. Currently, the Treasury adds 57.95 pence per liter of fuel through fuel tariffs and another 20 percent through VAT. How much VAT you will pay depends on how much fuel you are buying.
The second largest part comes from the wholesale cost of fuel. Wholesale costs are currency exchange rates, global oil prices and even the combination of domestic supply and demand.
When will the price of fuel go down?
Experts predict that high fuel costs will stay with us for the foreseeable future, and not just for the Ukraine crisis – energy costs have been high for the best part of the year, with demand rising as the world emerges from the lockdown.
Part of the problem is that relatively low barrel prices in recent years have stalled plans to drill for new reserves. This is true in Africa, the United States and South America, and while the current high prices may increase interest in exploring new reserves, it may take years for new wells to flow in the amount needed to influence the market.
Why is supermarket fuel cheaper than an independent forecourt?
Supermarket forecourts usually offer cheaper fuel prices and this is because of the market power supermarket hold. Companies like Asda, Tesco, Sainsbury’s and Morrisons are in competition with each other, so they keep fuel prices as low as possible in the hope that when motorists come to fill their tanks, they can also do their weekly grocery shopping.
There are constant rumors that supermarket fuels have less connectors and are of lower quality than traditional forecourt fuels, but there is less hard evidence. All fuels sold in the UK must comply with motor fuel control standards.
Why so much fuel on the motorway?
Motorway fuel stations argue that the reason they are more expensive is that many of them are open 24 hours a day and provide more services than regular forecourt. Motorway fuel stations also charge higher fares for the buildings they operate
In more remote areas, fuel is often more expensive due to higher transportation and supply costs, but according to RAC Energy spokesman Simon Williams, this does not apply to motorway stations: “We see no reason for motorway fuel to be so high. Much more expensive. In fact, it is much easier to get fuel from urban filling stations than from the delivery point of view. “
Why is the price of diesel higher than petrol?
Although diesel and petrol are taxed at the same rate by the Treasury, historically diesel is more expensive than petrol, as domestic refineries have struggled to meet demand. This has forced the UK to import diesel at a higher rate than petrol from other countries. In addition, diesel prices are driven by the cost of the additions that go into fuel.
In addition, the gap between petrol and diesel prices in the UK widens in winter. The end of the US “driving season” means retailers have extra petrol that they can’t export, so they sell here at lower prices. Demand for diesel, meanwhile, is growing across continental Europe, where fuel is commonly used to heat oil.
Recently, the flow of cheap diesel from countries like Saudi Arabia has turned around, the wholesale price of diesel has come close to that of petrol and the price of pumps has come down. However, the fact that we get more diesel from Russia than petrol means that the advantage is reversed.
What is your opinion about fuel prices in the UK? Can we pay too much for our petrol and diesel? What do you do about it? Join the debate in our comments section below …