If your wallet hasn’t yet felt the sharp rise in fuel prices, you will have at least heard of it. Soon after Russia invaded Ukraine in late February fuel prices saw a steep rise. While we’re nowhere near the doomsday tops initially predicted by experts (at least not yet), consumer prices are showing little sign of returning to their previous highs despite the government taking action.
The government’s spring budget saw fuel duty reduced by 5p per litre. Many thought this figure would see an immediate trickle-down into consumer prices. It has not.
Despite the reduction in duty costs, petrol and diesel still sits at relative highs of around 163p and 177p per litre. Figures which, according to the RAC’s fuel watch, mean that filling up a full tank of diesel now averages almost £100—£97 to be precise.
While it is easy to paint a sinister picture of the situation by suggesting fuel companies are not passing on the duty cuts to the consumer prices, such an aggressive stance would be misplaced. Unfortunately, wholesale fuel prices were already on the rise before this announcement, meaning that retailers are likely feeling little to no effect from the duty reduction.
Thus, it’s clear that the duty reductions are having an effect at temporarily stabilising UK consumer fuel prices while international markets are still shooting up.
Unsurprisingly, the single largest cause of the recent spike in fuel prices has been the Russian invasion of Ukraine. Russia is one of the world’s largest oil and gas producers, with invasion-induced sanctions causing many problems—both legal and ethical—for sourcing fuel or crude oil from Russia.
The UK also has a huge tax on fuel, with 39% on diesel and 40% on petrol—with the usual 20% VAT added atop that. While this hasn’t changed in recent months, it does explain why UK fuel prices remain relatively high.
Experts predict that we will be seeing high fuel costs for the foreseeable future. Beyond the current crisis in Ukraine, energy continues to be in high demand across the world in the wake of COVID lockdowns.
There are a number of things you can do to keep your fuel costs down. If you are a frequent driver, these may manage to save you substantial amounts in the coming months—depending on the trend of fuel prices.
As energy is seeing increases in price across the board, chances seem slim that these prices will drop any time soon. Meaning that we’re all going to need to be a bit more fuel conscious in the coming months. Whether that means driving less, driving more economically, or selling up for a more fuel/energy-efficient alternative is up to you.