UK Fuel Prices: Resurgence of Price Increases Following Months of Decline
Fuel prices in the UK are once again on the rise after a period of decline, according to new figures from the RAC’s fuel watch. Over the last three weeks, the cost of petrol has increased by 3.2 pence per litre to a total of 143.4p, while diesel has jumped up by 4 pence per litre to 152p. This increase comes despite the recent trend of falling petrol prices, which dropped below 140 pence per litre for the first time since October 2021.
Reasons for the recent price increases include rising oil prices and attacks on vessels in the Red Sea by Houthi rebels. These attacks have forced tankers to take longer routes, avoiding the Suez Canal and instead going around South Africa’s Cape of Good Hope. Other factors contributing to the price hike include global refinery maintenance closures, the start of America’s driving season, and UK retailers buying more fuel stocks ahead of the Budget to protect against a possible fuel duty hike.
According to the RAC, drivers are also losing out due to retailers taking a bigger margin. Last year, prices on supermarket forecourts had an average markup of 10 pence per litre, compared to a 6p markup in 2019. While supermarket margins have decreased since January, they are still significantly higher than before the pandemic and Russia’s invasion of Ukraine.
Northern Ireland has consistently provided the lowest fuel prices in the UK. Both petrol and diesel are 5p per litre cheaper than the national average, with prices at just 135.28ppl and 144.2ppl, respectively. These prices are also lower than the averages charged at the big four supermarkets.
The price of fuel is largely determined by the wholesale price of Brent crude oil. Fluctuations in this price can take weeks to filter through to the forecourts. In July 2023, a report from the Competition and Markets Authority (CMA) found that drivers paid on average 6p per litre more for fuel in 2022 due to weakened competition and inflated pump prices.
The CMA recommended a “fuel finder scheme” to give drivers access to live, station-by-station fuel prices on their phones or sat-navs. This would help revitalize competition in the retail road fuel market. The CMA also suggested bringing in a new monitoring body to hold the industry accountable. The RAC supports these recommendations and emphasizes the need for a fuel-monitor function within the government to ensure forecourts don’t overcharge when the cost of buying fuel drops.
In conclusion, UK fuel prices are once again on the rise after a period of decline. The recent increases can be attributed to rising oil prices, attacks on vessels in the Red Sea, global refinery maintenance closures, the start of America’s driving season, and UK retailers buying more fuel stocks. Drivers are also losing out due to retailers taking a bigger margin. Northern Ireland continues to offer the lowest fuel prices in the UK. The CMA has recommended measures to improve competition and provide transparency in the fuel market, including a fuel finder scheme and the establishment of a monitoring body.