posted 1 year ago

UK Fuel Prices Hit 4 Year High Amid Tax Hike Fears

Record 2018 fuel prices revealed, why they have risen and fears of further cost if the fuel duty freeze is scrapped

Average fuel prices

Fuel prices have hit a 4 year high, risen repeatedly in recent months and might rise further if – as hinted - the government scraps its fuel duty freeze for The United Kingdom, The RAC Foundation confirmed. On September 10th 2018, the average cost of petrol rose to 130.2 pence per-litre and diesel hit 134.4. For comparison, the following table incorporates other recent averages.

Date    Average Price Of Petrol Per-Litre
   Average Price Of Diesel Per-Litre
August 6th 2018
   128.0
   132.4
July 2nd 2018
   126.5
   130.8
April 30th 2018
   122.2
   126.0
March 19th 2018
   119.2
   122.8

These fuel price hikes have a considerable impact on motorists. Consider a large, sports-utility class, diesel that has an 86-litre tank, for example. On March 19th 2018, it cost £105.61 to fill the tank from empty. However, this increased to £115.58 by September 10th (+ £9.97). A further £9.97 a week equates to £518.44 per-annum.

Drivers in more economical vehicles feel the pinch, too. For instance, it cost £50.06 to fill the 42-litre tank of a petrol supermini on March 19th 2018. However, by September 10th it cost £54.68 (+ £4.62). A further £4.62 per-week totals £240.24 annually.

Why fuel prices have risen

Uk Fuel Prices Hit 4 Year High Amid Tax Hike Fears Image 0

The RAC explained why fuel prices have risen in recent months. Key factors include:

  • Organisation Of The Petroleum Exporting Countries and Russia have limited oil production “to reduce an oversupplied market”
  • The United States has reimposed sanctions on Iran which is a prolific producer of oil (thus further restricting the supply)
  • Weakness of the pound relative to the dollar

Fuel duty hike

Despite such factors, Chancellor Philip Hammond hinted that the fuel duty freeze which has been in place since 2011 might be scrapped. The current rate is 57.95 pence per-litre. “By April 2019, freezes will have saved the average car driver £850”, he calculated. However, he further noted “the other side of the coin”.

For example, the government has promised to spend more on The National Health Service and the money has to come from somewhere. Mr Hammond argued that freezing fuel duty for the rest of the parliament would reduce tax income by £38 billion. That is “twice what we spend on all nurses and doctors every year”, he emphasised.

RAC urges caution

The prospect of a tax increase concerns RAC Foundation Director, Steve Gooding. He explained: “We should not forget that for many people real wages have stagnated or fallen over the past decade. As it is, transport – and in the majority of cases this means a car – remains the single biggest area of average household expenditure”.