Plan Insurance Blog

Fuel prices reach FOUR YEAR HIGH

For quite a while now, drivers have dreaded the drive to the petrol station to fill their vehicles up. And with the price of petrol and diesel now registered at its highest rate since July 2014, it doesn’t seem to be getting any better.

You may have been thinking that your trips to the filling station have become more and more onerous over the last couple of months. If that’s the case, then your suspicions are unfortunately true, the latest government figures released revealed that the average fuel cost of petrol is £1.30 per litre, while diesel currently stands at £1.34 per litre.

Why have fuel prices been so high?

The cost of fuel has been impacted by a variety of factors over the past few months, one being the low pound to dollar exchange rate, which has seen no real signs of improvement since it took a large drop after the Brexit vote.

Also, the cost of a barrel of oil this month has surpassed $80 – this is a high that has not been seen since November 2014. To make matters worse, it’s been forecasted that the cost could increase to $90, and if the pound stays at its current exchange rate, it will inevitably drive the cost of fuel up – an increase that will no doubt be passed on to the customer.

RAC spokesman and lead on fuel Simon Williams said:

“August was another bad month for motorists and it’s rapidly becoming a horrible year on the UK’s forecourts and it looks like further increases are inevitable.

“Having benefited from some very low prices two-and-a-half years ago, drivers get a nasty shock every time they go to fill up their cars, having to fork out more and more.

“While it’s clearly a tough time for regular motorists, unfortunately there is currently no end in sight to the rising cost of fuel.

“With the pound at such a low against the dollar, and fuel being traded in the US currency, it will only take a moderate rise in the price of oil for some eye-wateringly high prices to be seen at the pumps.

“With many factors at play on the global oil market, the price of a barrel could easily break through the 80 US dollar mark and stay there.

“If this were to happen it would be dire news for drivers and we could even see pump prices heading towards the record highs of April 2012 when petrol hit an average of 142p a litre and diesel 148p.”

UK supermarkets step in to spark price war  

On a brighter note for commuters, ASDA, one of the UK’s leading supermarkets, has seen the potential opportunity to draw in shoppers and became the first supermarket to set a national cap for the costs of fuel at their forecourt.

Asda’s national petrol cap will now be set at 126.7p a litre, which will come as a relief to many drivers. However, as diesel prices remain unchanged, this cap won’t help the majority of professional drivers, still fuelled with diesel.

Sainsbury’s and Morrison’s followed the initiative by cutting the cost of unleaded petrol by up to 2p a litre across their forecourts.

So, while fuel wholesale prices keep fluctuating, supermarkets may still continue to step in and subsidise the hikes for motorists, in the hope of luring commuters to spend in their stores. This might come as a saving grace to many drivers  but unfortunately won’t be much help for all those who drive diesel vehicles and can’t afford to swap them for a hybrid or electric one. And the government’s decision to abolish the grants for plug-in hybrid vehicles certainly won’t help them either.