The cost of fuel has reached an all-time high, with the price of petrol costing £1.67 and the price of petrol costing £1.79 a litre, on average, according to the latest RAC figures.
For the first time, prices of petrol and diesel steadily declined during the pandemic as the demand for petroleum decreased globally and the ramped-up production of oil due to political disagreements meant that the international petroleum market was saturated.
Analysis compiled by the U.S Bureau of Labour Statistics describes how OPEC (Organization of the Petroleum Exporting Countries) members such as Iran, Saudi Arabia and the United Arab Emirates raised output by 1.7 million barrels per day in May 2020 following an unsuccessful meeting with Russia to cut production during a time of reduced need for petroleum.
It mentions, despite a 30-million-barrel decrease in the need for petroleum around the world, OPEC countries upped their production to 30.4 million barrels per day, the largest production jump since September 1990.
The saturation of the market coupled with reduced demand meant that drivers in the UK benefited from fuel prices last seen in April 2016.
In Britain, May 2020 saw the cheapest retail price of petrol and diesel in four years with petrol costing, on average, £1.04, and diesel £1.17 at the pumps. A year later, this price crept up to £1.27 for petrol and £1.31 for diesel.
For Ford Fiesta drivers – the most common car driven in the UK – the average price of petrol has risen from £43.08 to fill a 42-litre tank at the lowest price during the pandemic to £70.14, a 62.81% increase from May 2020 to now.
For bigger cars such as the BMW 5 Series, the jump is less at 51.69%, from £80.24 to fill a 68-litre diesel tank to £121.72.
After Christmas, the average cost of petrol stood at around £1.45 per litre, and £1.48 for diesel. In the space of ten weeks, it stood at £1.59 for petrol and £1.69 for diesel last Monday.
Fuel prices have increased because the wholesale price for crude oil, which is used in the manufacturing process for petrol and diesel has increased.
This is due to the growing demand for resources as the world “gets back to normal” following the pandemic and Russia’s invasion of Ukraine at the end of February.
Experts warn, despite Russia only accounting for 6% of UK imports of crude oil, economic sanctions imposed on the country by Western powers for its war in Ukraine has impacted the global crude oil market, pushing up the prices.
It comes at a time where Britons are facing a “cost of living crisis” – as home gas and electricity bills are set to soar on 1 April due to an increase in the energy price cap. This is coupled with low-interest rates, increased water bills, council tax on local levels, and a rise to national insurance from next month.
One way which is being favoured by the automotive industry to reduce the price at the pumps is to temporarily lower fuel duty whilst we wait for global production prices to drop. Currently, 57.95p out of every litre of fuel sold goes to the Government in tax.
Chancellor Rishi Sunak has hinted at temporarily slashing fuel duty by 5p a litre in his Spring Statement 2022 on Wednesday to help soften the blow to motorists.
RAC fuel spokesman Simon Williams said: “The window for pump prices to come down appears to have been well and truly closed, with both oil prices and therefore wholesale fuel costs once again rising after last week’s big drop, putting yet more pressure on households and businesses.
“In just the last week, the average cost of a litre of petrol has gone up 3.5p and diesel by a staggering 5.5p. Filling up a 55-litre family car now costs £91.86 for petrol and £98.43 for diesel.
“Drivers faced with spiralling costs when they fill up will undoubtedly be looking to the Chancellor to act in Wednesday’s Spring Statement, so suggestions fuel duty may be cut from its current level of 57.95p in every litre of fuel sold will be widely welcomed. While there has been talk of a 5p cut in fuel duty, this may not be deep enough to make a real difference to drivers who are facing the highest ever costs to fill their tanks.
“However, ensuring all drivers fairly and fully benefit from the fuel duty cut depends entirely on retailers reducing their prices and not using it as an opportunity to take a greater profit on every litre they sell. On the other hand, reducing VAT, which is a tax on a tax, prevents this from happening and would guarantee drivers benefit fully.”