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UK gasoline and diesel prices fall below 175p unleaded
UK gasoline and diesel prices continue to ease and lead-free average prices are expected to drop below 175p per liter for the first time since the Jubilee weekend in early June.
That’s a 16.5p drop from the July 3 record average of 191.53p, but AA noted that wholesale gasoline prices have fallen 30p since then and retailers are not delivering enough savings.
Gasoline currently averages 175.24p per liter in the UK and diesel is 185.90p per liter. A fuel price checker in Northern Ireland, which has made it price-competitive in that part of the UK, has found that at least one gas station in Belfast charges petrol at less than 150p per liter.
So far for gasoline, an average reduction of 16.5p per liter is equivalent to saving 9.08 on an average tank, which returns 396 on a typical annual family budget. But if the full 30p store had been delivered, the store would have been 720.
AAs fuel prices spokeswoman Luke Bosdet said: “Low pump prices are currently straining household budgets and the benefits will double to at least 30p per liter from the July gasoline peak price. It has the potential to overwhelm your savings.
This is why the UK needs a fuel trade to deliver savings as quickly as possible. A drop in wholesale diesel cost of 20p per liter would also lower transportation costs, which could alleviate some of the inflation in goods and services.
Watchdog: Fuel retailers passed tax cuts.
The fuel retailer came under scrutiny after being accused of a 5p per liter fuel tariff cut that was not passed on to consumers and was in their pockets. Business Secretary Kwasi Kwarteng wrote to the President of the Competition and Markets Authority (CMA) requesting an independent review, reporting that the review had actually reflected the tax cuts in gasoline and diesel prices.
The CMA report raised concerns about the growing gap between crude oil prices and wholesale prices for gasoline and diesel fuel. Oil industry experts have suggested that this is due to limited refining capacity and low refining fuel inventories, which are identified as major drivers of the fuel price crisis facing the UK.
Why are diesel and gasoline so expensive?
Russia is one of the world’s largest oil and gas producers, so any disruption in production processes will affect the entire world.
With Russia’s full-scale invasion of Ukraine and the face of international sanctions, there is the potential for serious supply disruptions. Russia produces 4.5 million barrels of oil per day, with only Saudi Arabia producing more.
Sanctions imposed on Russia so far have targeted banks and oligarchs rather than the national energy sector, but factors such as Germany’s Nord Stream 2 gas pipeline delay will affect the energy market as a whole. Russia also has the ability to cut oil exports to Europe in a full-blown response to economic sanctions, and experts suggest Saudi Arabia’s oil fields may struggle to ramp up production enough to respond to those measures.
OPEC, an oil-producing cartel, is already struggling to meet its production targets, driven by demand for a rebound in crude oil following easing lockdowns. This has pushed prices up and analysts have warned that their ability to increase supply will be limited if inflows from Russia are affected by sanctions, the Financial Times newspaper reported.
What makes up UK fuel prices?
Fuel prices can be divided into three parts. Government-imposed taxes, drilling, refining and transportation costs, and fuel company profits.
For gasoline, diesel and bioethanol, the government gets about 65% of the total cost through fuel tax and value added tax (VAT). A fuel tax represents a fixed price of fuel that remains constant regardless of fluctuations in overall oil prices. Currently, the Treasury adds 57.95 pence per liter of fuel through fuel tax and 20% through VAT. The amount you pay in VAT depends on the amount of fuel you purchase.
The second largest chunk comes from the wholesale cost of the fuel itself. The wholesale cost is a combination of exchange rates, international oil prices, and domestic supply and demand.
When will gasoline prices go down?
Experts predict that high fuel costs will be with us in the near future, and energy costs will already be at their highest of the year as the Ukraine crisis as well as demand surges as the world emerges from lockdown.
Part of the problem lies in the fact that plans to drill new reserves have been put on hold in recent years due to relatively low barrel prices. This is true in Africa, the United States and South America, and while current high prices may increase interest in exploring new reserves, it may take years before new wells are produced in the quantities needed to impact the market.
Why is supermarket fuel cheaper than a standalone front yard?
Supermarket forecourts usually offer the lowest fuel prices because of the market power the supermarkets have. Companies like Asda, Tesco, Sainsburys, and Morrisons are all in competition with each other, so they keep fuel prices as low as possible, hoping they can do their weekly grocery shopping when motorists come to refill their tanks.
There are persistent rumors that supermarket fuel contains fewer additives and is of lower quality than traditional barnyard fuel, but there is little convincing evidence of this. All fuels sold in the UK must comply with the standards set out in the Motor Fuel Regulations.
Why is fuel so expensive on the highway?
Highway gas stations are more expensive, they claim, because many gas stations are open 24 hours a day and offer more service than a regular front yard. Highway gas stations also pay high rents for the buildings they operate.
In more remote areas, fuel is more expensive due to higher transportation and supply costs, but according to RAC fuel spokesperson Simon Williams, this does not apply to highway stations. There’s no reason highway fuel should be so much more expensive. In fact, it’s a lot easier from a delivery standpoint than refueling a city gas station.
Why is diesel more expensive than gasoline?
Although the Treasury charges diesel and gasoline the same tax, diesel has historically been more expensive than gasoline because domestic refineries struggled to meet demand. This has led the UK to import diesel from other countries at a faster rate than gasoline. Diesel prices are also rising due to the cost of additives in fuel.
Also, the gap between UK gasoline and diesel prices widens during winter. At the end of the US driving season, retailers have surplus gasoline that they can’t export, so they sell it here at a lower price. Meanwhile, diesel demand is growing across continental Europe, where fuel is typically used for heating oil.
The recent influx of cheap diesel from countries like Saudi Arabia has changed the charter, bringing diesel wholesale prices closer to gasoline prices, and pumping prices down accordingly. However, the fact that we get a higher percentage of diesel in Russia than gasoline means that the advantage is again turned in the opposite direction.
What do you think about fuel prices in the UK? Are we paying too much for gasoline and diesel? What would you do about it? Join the discussion in the comments section below…
Sources 2/ https://www.autoexpress.co.uk/news/93906/uk-petrol-and-diesel-prices-unleaded-fall-below-175p The mention sources can contact us to remove/changing this article |
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