A litre of diesel is, on-average, now 24p more expensive than a litre of unleaded petrol, according to the RAC's 'Fuel Watch' price analysis. Whilst the average price of diesel, per litre, has decreased since its 9+ year peak in July this year, it still remains much higher than petrol and, understandably, thousands of motorists are wondering why.
The latest figures from the RAC, released on October 24, show the average price for unleaded petrol in the UK is 165.75 pence per litre with super unleaded petrol retailing at 178.85 pence per litre. The RAC said it did not expect a great change to these average prices in the coming weeks. However, the motoring company reported that buying diesel from a UK petrol station would set you back an average of 189.27 pence per litre - and that this figure was actually "likely to rise" in the coming weeks.
According to UK motoring magazine Auto Express, rising fuel prices are a result of petrol-producing countries in OPEC (the organisation of the petroleum exporting countries) "agreeing to cut production by two million barrels per day," an action which has led to the trading price of fuel increasing which has kept the retail price high - even though it has fallen from its peak earlier this year. You can get more consumer news and other story updates straight to your inbox by subscribing to our newsletters here.
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Earlier this month, a spokesperson for RAC Fuel told Auto Express: "Since OPEC and its allies agreed to reduce oil supply substantially, we've seen the price of wholesale diesel go up by 9p a litre and petrol by 4p a litre. This has led to the average price of diesel going up by almost 4p a litre and petrol by nearly a penny. Sadly for diesel drivers, the situation seems certain to get worse with prices heading back to 190p a litre which will add £3 to the [average] cost of a tank at £104.5."
So why has the price of diesel not come down at the same rate as petrol?
According to The Telegraph, which spoke to the director of the RAC Foundation, Steve Gooding, there are two reasons. One is that demand for petrol has gone down, as Americans use their cars more in the summer and less in the autumn. At the same time, demand for diesel has risen - as it is used as a method of heating and power generation and as a substitute for gas. With colder months coming, the demand for diesel, and therefore the higher price, is expected to continue for several months.
Interestingly, whilst certainly still high, the average price of a litre of diesel this week is actually 19p less than it was in July - the highest it had been for more than nine years. RAC Fuel Watch reports the average price for a litre of diesel on July 1, 2022, was a staggering 199.07p. At the time, the cost of filling up one's car was described as a "national crisis".
Experts put the increase in fuel prices at the time down to several factors, most significantly the fact that petrol was more in-demand than in previous months (especially during the pandemic) and because fuel companies had been cutting ties with Russia - the world's third largest supplier of oil - further causing supplies sourced from elsewhere to increase in price.
Plus, according to the RAC, how much we pay at the pump is also affected by:
- the global price of crude oil
- supply and demand for crude oil
- oil refinery production and capacity
- the pound-to-dollar exchange rate, as refined fuel is sold in US dollars per metric tonne
- distribution costs
- the margin fuel retailers decide to take
- fuel duty charged by the Government, currently 52.95p a litre
- VAT charged at the end of every forecourt fuel transaction, currently at 20%
"While some of these stay largely static - such as the fuel duty rate and VAT - others such as the oil price and dollar-to-sterling exchange rate can be very volatile. This explains why prices rise and fall. A combination of high oil prices and weak Sterling leads to the highest pump prices," the RAC adds.
How do I find the cheapest fuel near me?
The RAC advises checking its RAC Fuel Watch to see the average price and to "drive efficiently" to save fuel. The firm also recommends looking around at a few different petrol stations in your area and says: "Even taking a small detour to visit a cheaper forecourt can save you a few pence per litre, and over 12 months’ motoring that could lead to a sizeable saving." The firm also recommends looking into "credit card cashback" which is sometimes offered when spending money at petrol stations.
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