Petrol and Diesel Pricing
It’s been a difficult few weeks for UK energy industries with widespread fuel outages across the UK and nine gas and electricity supply companies collapsing due to the increasing energy prices.
The supply issues and rising fuel wholesale prices have meant that motorist has felt the pinch.
The US benchmark for crude oil, WTI, passed $81 on 11th October to reach a seven-year high. The UK benchmark, Brent, traded over $83.50, up from $51 at the beginning of the year, a 63% increase.
Consumers were looking for OPEC to increase output by more than the 400,000 barrels per day they agreed to last week, triggering a further rise in prices to these new heights.
Gas prices are also at record highs, leading to some Asian markets turning away from gas in favour of oil, further increasing demand for the commodity.
This increase in raw material costs has had a knock-on effect for refined products such as petrol and diesel, which have seen a wholesale price increase of 13-16 pence per litre during this period.
In the short term, demand for refined products is likely to stay high as Europe and Asia look to build strategic oil and natural gas stocks as we head into winter.
The UK government has reported that the current UK average price for petrol and diesel stands at 136p and 139p respectively, up 18-24% from the start of the year.
It’s not just at the pump that consumers will feel the pinch. Rising energy prices are one of the driving factors for inflation; when energy prices rise, the cost to manufacture, store and transport goods increases, which has a knock-on effect on the cost of living.
The recent fuel supply issues have caused localised price discrepancies, with some media outlets reporting significant price increases on some forecourts. There is some good news, the supply issues that have gripped most of the UK appear to be improving.
Local supply issues may still be an issue as we head into the winter. The government has repeatedly reassured the public that there is more than enough fuel in the UK, and the recent issues are not related to the sourcing or production of fuel grades but the delivery of them.
Will these increases continue?
It is difficult to say if we are at the peak of the fuel prices; prices certainly aren’t as high as 2014 just yet. However, some analysts warn that $100 per barrel is possible in the near future.
Nevertheless, at over $80 a barrel, many economists believe that the price will decrease demand. Costs at these levels will negatively affect the long-term oil and gas industries as alternative energies become more viable.
The local supply issues in the UK have put pressure on prices, although the recent improvements in supply should negate these temporary increases.
The Petrol Retailers Association, which represents over 5,000 independent UK forecourts, released this statement, “[The recent fuel price] rises are not “gouging” or “profiteering” by retailers during the present fuels crisis but entirely the result of global factors converging at the same time.”
What can I do to reduce costs?
Using the myAutomate app’s fuel price search enables users to make informed purchasing decisions when buying petrol and diesel. The government advises people to continue to purchase as normal and not to stock up or panic buy to try and beat supply issues or raise fuel prices.