Drivers in the United Kingdom have been dealing with high petrol costs since the beginning of the year, as the price of crude oil fluctuates. Chancellor Rishi Sunak imposed a 5p gasoline duty cut during his Spring Statement in a bid to alleviate the financial strain on households, however despite the minor savings, this discount is yet to reach customers’ purses. While the Russia-Ukraine conflict continues, are Britons going to witness a drop in petrol costs, or are we on pace for more record-breaking figures?
This month, both gasoline and diesel hit a low point. According to RAC Fuel Watch, the current average price for petrol is 182.31p per liter, while diesel prices are averaging 186.57p per liter.
On Wednesday, UK forecourt prices increased by the most in 17 years, compounding the already exorbitant living costs that Britons are already suffering.
People have rushed to Twitter to express their displeasure, with @JimDelahunt writing, “Petrol appears to have gone up 10p in a week with no notice…WE ARE BEING BLINDLY ROBBED.”
“A fuel price stabilizer is a fair way for the Treasury to assist manage the pump price, but they also need to bring in greater fuel price transparency to halt the everyday rip-offs at the pumps,” said AA spokesperson Edmund King.
“With the broader cost of living crisis, the £100 tank is not sustainable, thus the fundamental concerns must be addressed promptly.”
When petrol prices initially shattered records in March at 151-155p per liter, it was difficult to imagine them rising another 30p in only three months.
Will the price of gasoline continue to rise?
“For the foreseeable future, the answer is likely to be ‘yes,'” Andrew Black, principal and supply chain specialist at global procurement consultancy Efficio, told Express.co.uk.
“The Chinese lockdown is presently depressing demand there, but if and/or when China begins to open up again, it will put extra pressure on demand, which is already growing rapidly as the globe recovers from Covid.”
“At the same time, the potential to swiftly boost production is limited by long timeframes for bringing on new capacity investments; the situation in Ukraine and Russia; and the reality that there is less spare capacity among the other major oil producers than there used to be.”
“We are in the midst of a ‘perfect storm.'”
Why are gasoline prices rising?
Several factors are exerting pressure on oil and gas supply systems, which is driving up gasoline prices.
“Coming out of Covid, demand has risen much more quickly than many, particularly in the oil and gas business itself, expected,” Mr Black added.
“This is exacerbated by the fact that relatively low oil prices prior to and, notably, during Covid have led to a period of under-investment in the industry, resulting in fewer large oil and gas projects in the pipeline capable of picking up the slack.”
“This has been made significantly worse by the geopolitical situation, which is worse now than at any moment since the conclusion of the Cold War,” Mr Black concluded.
What has to be done to bring down fuel prices?
“In the UK, a major amount of the ultimate price of petrol and diesel is made up of Fuel Duty and VAT, which together account for roughly 45 percent of the entire cost,” Mr Black explained.
“Fuel duty was recently reduced by 5p per liter, however it appears that much of this was simply collected by shops, with no benefit to customers.”
“If the government really wanted to, it could cut duty again or lower gasoline VAT, but this would clearly have to be offset at some time by rises elsewhere or simply accepting that the country runs a larger deficit until things calm down.”
“The Government has also just announced a 25% fee – definitely not a ‘windfall tax,’ according to the Government – to assist consumers cope with rising household fuel expenses,” Mr Black stated.