Sharp rise in petrol and diesel costs driven by soaring oil price
The price of petrol rose by more than 2p in just 24 hours yesterday, which is the biggest daily increase in 17 years.
Prices rose from 178.50p per litre on Monday to 180.73p per litre on Tuesday – an increase of 2.23p. The cost of diesel also increased by 1.37p in the same period, from 185.2p to 186.57p.
The previous record rise was achieved on 4 September 2005, when the price of a litre of unleaded jumped by 2.29p, from 92.29p to 94.58p.
Rising prices mean it currently costs £99.40 to fill up a 55-litre family car with petrol – the highest amount ever – or £102.61 in diesel.
If prices continue to grow at a similar rate, the cost to fill up the same petrol tank will hit £100 by Thursday 9 June, according to the RAC.
“An unfortunate landmark,” RAC fuel spokesperson Simon Williams said. “These are unprecedented times in terms of the accelerating cost of forecourt fuel. Sadly, it seems we are still some way from the peak.”
Earlier in the week, the RAC claimed the UK was on the brink of a fuel crisis. It called for urgent, “radical government intervention” to prevent a national fuel crisis.
“More radical government intervention is urgently needed, whether that’s in the form of a further reduction in fuel duty or a VAT cut,” Williams said on Monday.
“As it is, drivers surely won’t be able to cope unless something is done to help… This is fast becoming a national crisis for the country’s 32 million car drivers as well as countless businesses.”
This rise has been driven by the soaring costs of wholesale oil, but analysts predict the price of a barrel will average out at $135 (£107.66). It needs to reach $160 (£127.66) for petrol to hit £2 per litre.
Sanctions on Russia following its invasion of neighbouring Ukraine have also heavily contributed to rising fuel costs. The country is one of the biggest producers of oil in the world and it supplied 18% of the UK’s diesel fuel last year.
This coupled with a weak pound and large post-Covid worldwide demand has caused prices to skyrocket. However, the wholesale price of petrol dropped yesterday by 5p, sparking hope of prices levelling out.
“If this price is maintained in the coming days, it could stem the flow of daily record petrol prices,” Williams said.
Meanwhile, the AA’s president, Edmund King, has said the government could act on the inflated prices, as the sharp increase means it is now raking in more money through the 20% fuel duty VAT.
“It was good that they cut duty by 5p, but they could probably add another 5p without noticing it too much because of the increased VAT revenue,” he told BBC Newsnight. “As the pump prices go up, the 20% that the government gets in VAT goes up.”
Earlier this week, the AA’s fuel price expert, Luke Bosdet, claimed many drivers stayed at home over the bank holiday weekend due to the price rise.
He said: “Shock and awe is the only way to describe what has been happening at the pump during the half-term break. Little wonder that nearly half of drivers stayed at home for the Jubilee-extended bank holiday.”