Petrol prices hit a new record over the weekend, reaching 148.02p a litre on average across the UK.
It marks a new all time high, beating a rate of 147.72p on November 20, AA fuel figures show, taking the cost of filling up an average family car to £81.
Diesel has now risen to 151.57p a litre. On Thursday, it passed the previous record set on November 20 of 151.10p.
“The cost of living crisis has been ratcheted up yet another notch, tightening the vice on family spending when it faces other pressures from impending domestic energy cost and tax increases,” said Luke Bosdet, the AA’s fuel price spokesman.
Experts warned that prices would continue to rise with records broken almost daily, amid fears that a Russian invasion of Ukraine could have a knock-on impact on supply.
A barrel of Brent crude, the global benchmark, traded above $95 yesterday, its highest price in more than seven years. It was $60 a year ago and analysts predict that it could "easily" surpass $120 a barrel in the coming months.
The increases have been largely driven by a rebound in global demand as the pandemic eases, combined with Russia and the Opec states cutting production.
The rise in forecourt prices has been worsened by retailers increasing profit margins in an effort to recoup losses during the Covid lockdowns, the RAC said.
Last month the big four supermarkets made an 8.6% margin on sales of unleaded petrol, against a 3.2% margin in 2019.
Simon Williams, a fuel expert at the RAC, said: "With the oil price teetering on the brink of $100 a barrel and retailers keen to pass on the increase in wholesale fuel quickly, new records could be set on a daily basis.
"The oil price is rising due to tensions between Russia, the world's third biggest oil producer and Ukraine. Fuel costs hit record along with oil production remaining out of kilter with demand as the world emerges from the pandemic."
A poll by AA found 43% of households are cutting back on car use to make up the costs, half of whom are lower earners, in the wake of the cost of living crisis.
Among drivers aged 18 to 34, 28% are cutting back on other consumer spending to compensate for rising petrol prices.
Across the 8,361 respondents of working age, 10% were cutting back on weekly shopping, rising to 17% among the 25-34 year olds.
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The surge, comes just a week after oil giant BP posted its highest annual profit in eight years.
The group revealed it swung to a mammoth £9.5 billion underlying replacement cost profit - its preferred measure - for 2021 from losses of £4.2 billion the previous year.
It notched up £3.01 billion of profits in the final three months alone, which was better than expected and up from just £85.1 million a year earlier.
BP also announced more cash returns for shareholders, with another £1.1 billion of share buybacks before its first-quarter 2022 results and a dividend payout of 5.46 cents (3.37p) a share for the fourth quarter.
The results suggest oil firms are reaping mammoth profit hauls while households and businesses are struggling due to soaring inflation.
Labour MPs argue that while households are paying through their teeth for gas - energy bills are set to spike more than 50% in April - the companies which extract that gas are reporting massive profits.
Supporters of a windfall tax on energy giants believe some of this money should be reclaimed to help struggling households cope with the rise.
Shell was in the firing line last week as it reported a hefty spike in profits on the same day as Ofgem announced a near £700 rise in the energy price cap.
Alongside its results, BP also announced plans to boost its spending on low-carbon and renewable energy.
Chief executive Bernard Looney said: "2021 shows BP doing what we said we would - performing while transforming.
"We've strengthened the balance sheet and grown returns, we're delivering distributions to shareholders with 4.15 billion US dollars of buybacks announced and the dividend increased, and we're investing for the future."
Liberal Democrat Leader Ed Davey said the real terms gap between corporations and real people needs to be adequately addressed.
"The truth is that this is about basic fairness. It simply cannot be right these energy companies are making super profits whilst people are too scared to turn their radiators on and terrified there will be a cold snap.
The government has said that a windfall tax would harm investment but this is an absolutely bogus argument. These profits have come out of nowhere, no energy company was expecting them, no investor was either.
"A windfall tax is the best way to get money to the people who need it quickly, but also to make sure there is some sense of trust and proportionality in the system."
Six ways to save on fuel
Nick Drewe, money-saving expert at WeThrift has shared six ways drivers can cut down on their fuel costs.
1. Use cashback schemes and loyalty cards
From Texaco to Sainsburys, various petrol stations and supermarkets offer cashback schemes and loyalty cards to encourage customers to use their services.
Every time you buy fuel at a particular station, you simply have to swipe your loyalty card and points are then awarded.
BP, for example, offers a loyalty scheme where if you earn 200 points, you’ll be able to claim £1 off your fuel or shop purchases. With a Tesco Clubcard, you’ll be able to earn one point for every £2 spent every time you fill up at the supermarket’s petrol station.
As the nation continues to grapple with the accelerated cost of living, these incentives can go a long way.
2. Be conscious of how much you’re topping up
Every time you fill up your tank, make sure to only top up what your car requires at the time. A top tip to deciding the correct amount of fuel you need is to keep a consumption notebook in your glove box or a record on your phone.
For every visit to the petrol station, note down how much fuel you put in your car to get from A-B. In this ever-changing economy, be sure to record your fuel consumption in litres and not in pounds.
3. Select your sat nav app carefully
If you’re driving in an unfamiliar location, make sure you use a sat nav to avoid going in circles and wasting your running costs.
Sat navs are great devices for saving money because they will show you the quickest route to your destination.
They can also work in real time and help you avoid getting stuck in traffic jobs, and some models will even select the most economical route to help you avoid fuel-stealing obstacles such as large hills and heavy stop-start traffic.
Motorists will be pleased to know that there is a new ‘eco-friendly routing’ feature on Google Maps, which instructs drivers on the most economic route to take.
4. Fill up your tank at supermarket
Supermarket fuel is often cheaper than branded fuel.
Whilst supermarket fuel usually comes from the same refineries as the big brands brands like Shell or Esso, these brands will usually add a range of special additives to their own fuels in order to improve efficiency and performance - which is why they tend to cost more.
5. Inflate your tyres to the right pressure
If you have the incorrect tyre pressure, you'll be using more fuel to keep your car running smoothly. This is because of the added friction while driving that comes from a misshapen tyre.
To know what the recommended tyre pressure is for your vehicle, first check your vehicle handbook.
Sometimes the pressure could be printed either in the sill of the driver's door or on the inside of the fuel tank flap.
Your vehicle manufacturer may also suggest different tyre pressures for your front and rear tyres so it is always worth doing your research.
6. Drive smoothly
One of the easiest ways to save on fuel is to drive in a smooth manner. Be sure to accelerate smoothly and avoid hard breaks to limit your fuel consumption. Shifting gears from time to time can also help you to avoid throwing away your fuel.
If you’re driving a new model, check if your vehicle has a gear-shift indicator, as this will inform you of the most economical and efficient point to change your gear.
As well as this, there are apps such as Aviva Drive that lets you record your driving style and give you indications on how to improve it.
