Oil prices UK: Fuel costs hit ninth consecutive all-time high as ministers urged to cut VAT for drivers
Experts welcome ‘hint of better news’ as crude oil prices stabilise
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Your support makes all the difference.The cost of petrol and diesel in the UK has hit an all-time high for the ninth consecutive day, as the RAC warned that drivers will be seeing “unbelievably high prices on forecourts”.
The average prices of petrol and diesel hit 161.1p and 170.1p per litre on Thursday, according to data firm Experian Catalist – up respectively by 8p and 13p in a week.
However, costs varied dramatically, with petrol hitting more than £2 per litre at some London forecourts – prompting the RAC to urge chancellor Rishi Sunak to slash VAT on petrol and diesel to 15 per cent.
There was, however, a “hint of better news” as crude oil prices stabilised below $120 a barrel after the UAE signalled it would push other oil exporting nations to boost production in an attempt to fill some of the gap left by Russia.
This “could lead, in a week or so, to a slight slowing in the daily pump price increases, and records being broken less frequently”, the RAC said, although experts warned that oil prices would remain volatile and could spike further.
‘Highly unlikely’ Sunak will cut fuel duty, report suggests
Rishi Sunak will not include a new package to help people cope with energy bills in his spring statement and is “highly unlikely” to cut fuel duty, according to The Times.
The paper cited a government source as saying that fuel duty cuts will be considered later in the year when the “volatile” outlook for petrol prices becomes clear.
Of the energy price cap – which is set to rise by nearly £700 in April – and corresponding support package, the source was quoted as saying: “Energy bills in April have not changed because Russia has invaded Ukraine ... The price cap was set before then. There will be another decision to be made in the autumn when we have a clearer picture of the outlook for energy prices.”
Olly Bartrum, a senior economist at the Institute for Government think-tank warned that this is “only part of the picture” given that fuel prices are already rising as a result of Russia’s invasion, amid soaring inflation.
‘Drivers will be wondering whether these record rises are ever going to stop,’ RAC says
Drivers in the UK will be “wondering whether these record rises are ever going to stop”, an RAC fuel spokesperson has said.
“While prices may well continue to go up in the coming days, oil and wholesale fuel prices dropped for the second day in a row yesterday which should hopefully slow, or even halt, the cycle of escalating pump prices in the next week or so as retailers buy new stock at lower prices,” Simon Williams said.
“There is, however, a concern they will be reluctant to lower their prices for fear of catching a cold if wholesale costs were to jump back up again.
“The oil price drop, which was the biggest since the early stages of the pandemic, was caused by traders becoming less concerned about supply disruption.
“The barrel price fell almost nine US dollars on Thursday from 129.41 dollars to 120.99 dollars having already come down from nearly 138 dollars on Tuesday.”
My colleague Joe Middleton has more on the latest price increases here:
Fuel prices hit record new high on UK forecourts
The average cost of a litre of diesel reached a new high of 170.1p on Thursday, up from 167.4p on Wednesday
Petition calling for fuel duty cut nears 50,000 signatures
A petition calling on the government to reduce fuel duty and VAT by 40 per cent for a two-year period is approaching 50,000 signatures.
While the petition was launched last year, the RAC notes that it has gathered momentum in recent weeks due to the impact the Russian invasion of Ukraine has had on the price of fuel.
The petition has a deadline of 18 April for it to hit the 100,000 signatures needed for MPs to debate it in parliament.
In a response last November, the government cited 12 consecutive years of frozen fuel duty rates in claiming that “the average UK car driver will have saved a cumulative £1,900 by the end of 2022-23, compared to the pre-2010 escalator”.
It added: “Revenues from fuel duty help to fund essential services, like our schools and the NHS. It is important that we safeguard those revenues for the sake of our first-class public services.”
Cost of refuelling diesel transit van rises £7 in four days
The average price of a litre of petrol at UK forecourts on Thursday was a record 161.1p, figures from data firm Experian Catalist show.
This is up 5.5p since Sunday – adding £3 to the cost of filling a 55-litre family car.
Average diesel prices also reached a new high of 170.1p per litre on Thursday.
The 8.8p increased compared with Sunday’s price means a full tank for a typical 80-litre transit van is £7 more expensive.
Prices at forecourts ‘may now level off and hopefully fall'
Reductions in wholesale fuel costs this week “offer the hope that pump prices may now level off and hopefully fall”, according to an AA fuel price spokesman.
“Ironically, motorists rushing to fill up and beat pump price surges the weekend before last may have accelerated pump price rises, as stock turned over faster than normal and higher costs worked their way through to the pump sooner than normal,” Luke Bosdet said.
“The squeeze on the finances of families with cars continues but the apocalyptic pump price predictions seem much less likely to happen.”
Fuel prices hit yet another record high in UK
The average cost of a litre of petrol at UK forecourts on Thursday was 161.1p – up from 159.6p a day earlier, according to the data firm Experian Catalist.
The average price of diesel rose from 167.4p per litre on Wednesday to a new high of 170.1p.
Global oil prices will likely remain volatile, analyst says
My colleague Ben Chapman reports:
Despite stabilising yesterday, oil prices will remain volatile, according to UBS oil strategist Giovanni Staunovo, who warned that the UAE’s recent announcement backing higher oil production levels may not hold prices down for long.
“In the short-term there is no producer who can offset large production disruptions [in Russia},” he said.
Only Saudi Arabia and the UAE are thought to have any significant amount of spare capacity and it can cover only a fraction of the amount that Russia typically exports each day.
Oil consuming nations are expected to continue to ease the upward pressure on prices by releasing more of the strategic reserves they keep.
“All these measures will result in lower spare capacity and lower strategic stocks, making the oil market even more sensitive to additional supply disruptions,” Mr Staunovo said. “Ultimately prices may need to rise even higher ... This would destroy demand and bring it back in line with the available supply.”
That would mean higher inflation for households. Capital Economics recently hiked its forecast for consumer price inflation, predicting that higher energy bills will push the cost-of-living gauge to 7.3 per cent in October.
KPMG has inflation peaking as high as 10 per cent, which would mean a big pay cut in real terms for millions of people in the UK.
Oil supplies unaffected after drone attack at Riyadh refinery, official says
A refinery in Saudi Arabia’s capital, Riyadh, was attacked by a drone yesterday morning but oil supplies were not affected, state news agency SPA reports.
The attack caused a small fire which did not result in any injuries or casualties, SPA said, citing a statement by an energy ministry official.
It came as the UAE’s move to signal that – with a huge void left by Russia – it would push other oil exporting nations to boost production was welcomed by experts as the catalyst for global crude prices stabilising yesterday.
The world's top oil exporter has faced frequent missile and drone assaults by Yemen's Iran-aligned Houthi group, which has not announced any strikes against the kingdom in recent days and the Saudi-led coalition had not issued a statement regarding Thursday's incident.
Slash VAT to help families weather cost-of-living storm, demand Lib Dems
Our political editor Andrew Woodcock has this exclusive report on calls for broader VAT cuts:
Liberal Democrat leader Sir Ed Davey has today set out a bold plan to help families weather the cost of living crisis with a one-year 2.5 per cent cut in VAT, paid for in part by an extended windfall tax on energy companies.
Speaking to The Independent on the eve of his party’s annual spring conference, Sir Ed said Boris Johnson and Rishi Sunak have failed to take the “radical” steps needed to shelter voters from what is shaping up to be the harshest economic storm for 50 years.
He said the cut in VAT from 20 to 17.5 per cent would put an average £600 a year in the pockets of struggling families.
The £18bn cost would be funded partly from borrowing – “the right thing to do in a one-off crisis”, he says – and partly from an increase in the “Robin Hood” tax on North Sea oil and gas giants demanded by Lib Dems.
Having previously called for a £5bn levy, Sir Ed now says he would boost the take to somewhere around £10bn to reflect the additional profits being made “on the back of Putin’s aggression” in Ukraine.
Slash VAT to help families weather cost of living storm, demand Lib Dems
Exclusive: At spring conference, leader Ed Davey hopes to position Lib Dems as ‘party of fair taxes’
Rishi Sunak told to cut VAT on petrol and diesel
The transport industry has called on the government to cut VAT on petrol and diesel as rising prices create “a really quite tough” situation for drivers.
Simon Williams, fuel spokesman for the RAC, told BBC Radio 4 this morning: “We know from our long-term research that eight in 10 drivers would struggle to be without their car, so having access to a car in a pandemic has also become more important, and so it's really quite tough now."
“The cost of filling up is over £88 for petrol and £92 for diesel,” he said, adding that the pandemic had already caused prices to rise.
The RAC is urging the chancellor, Rishi Sunak, to take action, he said, adding: “One thing he could do is reduce VAT on petrol and diesel.
“At the moment, just the VAT, which is of course called a tax on a tax, is bringing 26 pence per litre so, bringing that back to 15 per cent would instantly cut it by about six pence per litre.”
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