Fuel Prices Rise as Drivers Face Higher Costs at the Pump
When prices for a litre of petrol and diesel dipped below £1 for the first time in years.
Drivers rightly rejoiced as the cost of filling their car with fuel was more affordable than it had been for a long time. And for some motorists, falling fuel prices make a real difference to how much disposable income they have available each month.
However, a new report from the RAC has found that the average cost of fuel has risen again in the past month, increasing by 3p a litre and marking the first upward movement since August of 2015.
As ever, blame can be placed at the door of the oil market, where the price of a barrel is eight per cent higher today than it was at the peak of the price-cutting frenzy that helped make the second half of last year a savings bonanza for car owners in the UK.
Report spokesperson Simon Williams pointed out that oil prices are going up because of an agreement reached by the countries producing this commodity to deliberately stem the flow of exports and thus inflate prices.
Many nations have been suffering from serious economic issues as a result of the recent fall of oil prices, which hit a 12-year low in 2015. But Williams said that the market was becoming more stable at the moment, and he predicted that the price per barrel is likely to settle at between £24 and £38 this year.
Analysts do not expect the rapid price hikes of 2012 to happen again this year, meaning that motorists will pay a little more for petrol and diesel but will not have to fork out nearly £1.50 per litre. Nor will the sub-£1 prices seen on the forecourts of many supermarkets at the start of 2016 return.
In the Budget announced by Chancellor George Osborne last month, it was confirmed that the government would not be increasing the amount of tax which is levied on fuel in the UK, in spite of earlier rumours that this freeze on duty would be removed. So for the foreseeable future the biggest impact on prices will come from the oil industry itself.
There are a number of factors which alter how much it costs to fill a car with either petrol or diesel. And aside from tax, motorists are also affected by changes in how much companies have to pay to extract the oil used to make the fuel, refine it to a saleable state and ultimately distribute it to filling stations.
These businesses must also endeavour to make a profit from their operations. And while there is a decent amount of competition in the UK, many drivers will be aware that buying fuel in certain places will be much more expensive than in others.
The difference between prices at supermarket stations and motorway services is perhaps the most pronounced. And the government is actually taking steps to prevent people paying through the nose to fill up when they are on a major motorway by installing signs which show fuel costs in real time.
Williams said that the excuses given by many providers of fuel on the motorways to explain the price difference, including arguments over 24-hour opening and the cost of distribution, do not hold up when put under scrutiny. The reality is that drivers on high-traffic routes are something of a captive audience, especially when the fuel level warning light comes on and there is no alternative but to stop at the next services.
The likelihood of the oil market stabilising in 2016 is certainly a good thing, since car owners will be able to work out a budget for fuel which is consistent over a longer period. And as long as fuel duty is held at its current level, there should not be any nasty surprises.