Fuel prices continue to soar amid the UK's cost of living squeeze, with some petrol stations charging more than £2 a litre.
The latest figures from Experian show the average price of petrol reached a new high of 191.5p per litre on Sunday. The average price of diesel was measured at 199.0p per litre.
It comes as more than a dozen protestors have been arrested for driving too slowly on motorways on Monday. The 'go-slow' demonstrations were understood to have been organised via social media as part of action calling for a cut in fuel duty.
READ MORE: M5 reopens after fuel price campaigners block motorway for hours
Why does the UK/US exchange rate affect petrol prices?
The pound’s weakness against the US dollar is partly to blame for soaring fuel prices on British forecourts. Wherever you are in the world, crude oil – which is refined to make petrol and diesel – is paid for in dollars, so a worsening exchange rate means the UK is steadily paying more for the same amount of fuel.
Prices at the start of June were around 4% higher than they would have been if the UK/US exchange rate had remained constant since the start of the year, according to analysis by Bloomberg. The international petrodollar system has been fairly favourable to the UK in the past but the economic impacts of Brexit and the Covid-19 pandemic combined with Russia’s invasion of Ukraine have altered the equation.
Since Putin’s decision to attack his eastern European neighbour in February, the dollar has strengthened against many world currencies as it is perceived as a relative ‘safe haven’ for investors. In those four months, the relative value of the pound has slipped from £1/$1.34 to £1/$1.21.
The cost of crude oil has also been directly impacted by the war in Ukraine. The UK is among the western nations that have announced a phasing out of Russian oil as a result of Putin's aggression.
This means that demand for oil from other producers has increased, leading to higher prices. Higher prices combined with a less favourable UK/US exchange rate means British motorists are literally getting less bang for their buck.
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