Motorists have been warned they face more financial pain at the fuel pumps with the cost of petrol and diesel rising again and prices continuing to in
Motorists have been warned they face more financial pain at the fuel pumps with the cost of petrol and diesel rising again and prices continuing to increase over the coming weeks.
It comes after July saw a second consecutive month of average fuel price rises as retailers ‘wasted no time in passing on wholesale price increases’ following a huge jump in the cost of oil.
Over the weekend, the average price of diesel rose above 150p-a-litre for the first time since May, while petrol reached a six-month high.
Why are fuel prices back on the rise? Petrol has reached a six-month high while diesel is the most expensive it has been for three months. Here’s why…
The AA reports that diesel reached an average of 150.61p on Sunday, having last been above that level on 21 May (150.80p).
In between, it had fallen as low as 144.31p on 18 July.
Petrol rose to 149.13p-a-litre at the weekend, an average last seen on 4 February (149.17p). Its low-point was 143.04p on 7 June.
‘A 5p-a-litre increase in just over a fortnight will lump pressure back on diesel users, particularly on small businesses, and results directly from the oil price hike that was brought on by production cuts,’ explains Luke Bosdet, the AA’s spokesman on road fuel prices.
‘By the end of last week, the wholesale price of diesel was 11p a litre higher than in mid-July.
‘Whether that continues or turns round before finding its way to the pump will be critical for UK inflation.’
Why are petrol and diesel prices increasing?
Retailers are pushing prices higher on the back of rising oil and wholesale costs.
The wholesale price of petrol rose by 6p last month due to the higher cost of a barrel of oil, which jumped by $10 in July.
Oil rose from around $74 a barrel at the start of the month to $85.56 by 31 July – and remains around the same level today.
This is the highest oil price posted since the middle of April.
For British drivers the situation is exacerbated by the pound having fallen against the US dollar since mid-July, declining from a recent peak of $1.31 to $1.27.
This is causing ‘wholesale prices to rise significantly’, according to the RAC’s fuel price expert, Simon Williams, who added that retailers are ‘wasting no time in passing this on to drivers’ as they lumped an extra 2p-a-litre on the price of petrol by the end of last month.
The rise in petrol and diesel is primarily as a result of the hike in oil prices which jumped by more than $5 a barrel, from below $80 to $85 a barrel
He said: ‘July marks a turning point in the year for fuel prices as diesel stopped falling while petrol recorded its second consecutive monthly increase. But more concerning is the fact that oil has gone back up to $85 a barrel, causing wholesale prices to rise significantly.’
‘While we’re fortunately not in the kind of upward price spiral we experienced last year, it feels like the better times at the pump are over for the time being.
‘If oil producers continue to curb production then bigger forecourt price rises could be on the cards.’
What is the government doing to help drivers?
Last week, energy secretary Grant Shapps warned fuel retailers he will ‘call out any foot-dragging’ over the sharing of pump price data as the government mounts pressure on the sector to be more transparent with motorists.
The comments – made in a letter to the Competition and Markets Authority (CMA) – came in the wake of the largest weekly rise in petrol prices witnessed in more than a year.
The CMA is planning to launch an interim voluntary system for retailers to publish fuel prices by the end of the month.
Asda has already committed to publishing its live fuel price data across its 320 UK forecourts.
Asda will become the first fuel retailer to publish daily petrol and diesel prices at each of its filling stations on the store locator section of its website
Mr Shapps wrote: ‘I want to reiterate the Government’s strong support for the CMA’s temporary scheme for major retailers to make their daily prices available in a common, machine-readable format by the end of August.
‘I strongly expect retailers to co-operate with the CMA to develop the voluntary scheme to this timeline and I will not hesitate to call out any foot-dragging.
‘Please do keep my officials abreast of participation in the voluntary scheme so we can act if necessary.’
Mr Shapps added that the Government ‘remains committed’ to developing a mandatory open data scheme for fuel retailers ‘as soon as possible’.
In early July, the CMA published the results of its market study into the supply of road fuel in the UK which found ‘problems in relation to three aspects of the retail market: national, local and motorway.’
Steve Gooding, director of the RAC Foundation, said: ‘High street retailers might be discounting their prices to lure us back to their shops, but there is no such luck at our service stations as fuel prices rocket just as many families are filling up for their summer holiday getaways.
‘We can only hope that fuel companies are still feeling the eyes of ministers and the CMA on them as they calculate how much they really need to charge to cover their costs.’