UK

UK fuel prices near high-time high amid growing ‘cost of living’ crisis

Petrol and diesel prices are rising again towards record levels despite lower wholesale costs, it emerged today.

The AA revealed that Britain’s average price of petrol rose yesterday to 146.27p a litre while diesel hit 149.58p –with both now just around 1.5p short of the all-time highs set two months ago of 147.72p and 151.10p respectively.

It said that since last November, the fuel trade had allowed average pump prices to fall just 2p a litre to their lowest point of 145.53p on January 4, despite a much bigger slump in wholesale costs of as much as 10p a litre.

Petrol retailers and supermarkets have both been accused of fleecing motorists and failing to pass on more of the wholesale savings at the pumps – with prices between stations differing by up to 8p a litre in some areas today. 

But the Petrol Retailers Association defended the industry today, saying that the 8,378 UK sites faced a squeeze on costs including wage inflation and electricity prices – the latter of which had trebled for some since January 2020. 

It comes after a lack of lorry drivers and supply concerns led to panic buying in late September and early October 2021 which left many petrol stations in Britain dry for days as motorists queued for hours to fill up their vehicles. 

Luke Bosdet, the AA’s fuel price spokesman, said today: ‘Record petrol prices at the pump were generated by wholesale costs above 54p a litre. Even this week, costs that will feed on to forecourts soon are still 2p below that.

Brent crude oil is now at around $90 a barrel which is its highest price since October 2014. The price since 2008 is displayed

Brent crude oil is now at around $90 a barrel which is its highest price since October 2014. The price since 2008 is displayed

‘Yet, what UK drivers are typically paying for petrol now is 1.5p shy of those record prices. The fuel trade, having got away with bloated margins over the past two years, is pumping more profit out of them.’

He continued: ‘Much of that is down to very much diminished fuel price competition at supermarkets. In one town, supermarket petrol is up to 8p a litre more expensive than at non-supermarket forecourts nearby.’

Mr Bosdet pointed to data from the AA’s app focused on Market Drayton in Shropshire, which found the price of petrol at an Esso garage was 139.9p while it was 147.9p at a nearby Morrisons and 149.9p at a local Shell garage.

He added that an AA survey of 11,091 drivers a fortnight ago found that 7 per cent of regular supermarket fuel customers had switched to a non-supermarket retailer, while 5.5 per cent were heading the other way.

But Petrol Retailers Association executive director Gordon Balmer said today: ‘Brent crude has gone to a high since 2014, it’s approaching $91 a barrel now. That does affect wholescale pries, they were up this week as well.’

OCTOBER 2021 -- A long line of motorists queue for fuel at an Esso petrol station in Ashford, Kent, on October 1 last year

OCTOBER 2021 — A long line of motorists queue for fuel at an Esso petrol station in Ashford, Kent, on October 1 last year

He told MailOnline that it was a ‘bit rich for one company that isn’t in our industry to postulate what another part of our industry needs to make (on margins), because they don’t have any idea of the cost pressures’.

Mr Balmer also said that petrol stations were also suffering from a drop in revenue with fuel sales volumes at roughly 75 per cent of pre-pandemic levels before Christmas. They have since risen but only to 88 per cent.

He said petrol stations were also struggling with labour costs and having to pay well above the minimum wage so they can compete with bigger chains such as Tesco and Sainsbury’s which can absorb the costs in other areas.

Mr Balmer added that the Petrol Retailers Association represents some larger chains but quite a lot of its members are single independents and it was ‘tough for them to absorb cost increase especially on reduced volume’.

Separate research by the AA earlier this month previously found that supplier margins reached a staggering 20.5p a litre in the run-up to Christmas – or more than £11 for every average 55-litre tank filled up.

SEPTEMBER 2021 -- A sign at a BP petrol station in Birmingham telling people that there was no fuel on September 28 last year

SEPTEMBER 2021 — A sign at a BP petrol station in Birmingham telling people that there was no fuel on September 28 last year

It comes as oil prices rose again today, heading towards a sixth consecutive weekly gain which means higher pump prices are likely to follow in the coming weeks as geo-political tensions continue to raise supply concerns.

The AA's app found that in Market Drayton in Shropshire, the price of petrol at an Esso garage was 139.9p while it was 147.9p at a nearby Morrisons and 149.9p at a Shell garage

The AA’s app found that in Market Drayton in Shropshire, the price of petrol at an Esso garage was 139.9p while it was 147.9p at a nearby Morrisons and 149.9p at a Shell garage

The increase will pile pressure on the Government to take action to help families pay spiralling household and energy bills as they face a ‘cost of living’ crisis with inflation now running at 5.4 per cent – its highest rate in 30 years, according to the Office for National Statistics.

Today, Brent crude futures were up 66 cents, or 0.7 per cent, at $90 a barrel by around noon, having hit $91.04 yesterday for the highest price since October 2014.

US West Texas Intermediate (WTI) crude futures rose 57 cents, or 0.7 per cent, to $87.18. WTI also hit a seven-year high of $88.54 earlier in the session. 

Both Brent and WTI are on track for what would be the longest run of weekly gains since October. 

Supply scarcity has pushed the six-month market structure for Brent into steep ‘backwardation’ of $6.56 a barrel, the widest since 2013. 

This means that current levels are higher than those in later months, which usually encourages traders to release oil from storage to sell it promptly.

Oil prices continue to be pushed up from concerns that the Ukraine crisis could disrupt energy markets, with Russia having massed troops near Ukraine’s border although it says it does not plan to invade.

Analysts have also highlighted that the market is focused on a meeting next Wednesday of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, collectively known as OPEC+. The OPEC+ producer group is likely to stick with a planned rise in its oil output target for March, several sources told Reuters.

The London-based Petrol Retailers Association has been contacted for comment by MailOnline this afternoon. 


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