Misery for Motorists as Petrol Prices Peak test
Following a tumultuous year and a half for drivers, petrol prices are once again on an upward trajectory. The UK market suffered a sharp spike in costs back in February 2022 during Russia's incursion into Ukraine. Since then, the prices have shown considerable volatility.
It’s currently estimated that filling up an average family car costs around £82. In this article, we delve into the causes of these fluctuations, the link to energy bills, and strategies for saving.
Fluctuations in Pricing
Data provided by Experian reveals that, as of mid-August 2023, the average petrol price at British garages stood at 149.1p per litre. Within two weeks, this figure edged up by 4p, marking its highest point since the same period in 2022. The average diesel price marginally surpassed 150.6p per litre, reaching its peak since May.
As illustrated here, fuel prices saw a decline over several months, attributed to a decrease in oil demand. This trend is largely a consequence of major global economies grappling with a challenging transition after COVID-19 lockdowns, marked by elevated inflation and consumers facing heightened living costs.
Factors Influencing Petrol Prices
There exists a close link between UK fuel prices and the fluctuations in the cost of crude oil, which serves as the raw ingredient in the production of petrol and diesel. Recent weeks have witnessed a steep rise in wholesale oil prices due to efforts by its producers to reduce the amount of barrels going overseas. Prior to the beginning of the Ukraine conflict in early 2022, the UK heavily relied on Russian oil. However, the deterioration in diplomatic relations and the imposition of sanctions by the NATO alliance effectively broke this supply chain.
Key members of the OPEC+ consortium, Saudi Arabia and Russia, have significantly curtailed their oil production by over a million barrels daily. Certain Western nations have accused Saudi Arabia, the leader of the syndicate, of manipulating prices to sustain a substantial revenue stream, as the country endeavours to diversify its economy away from oil, which currently constitutes 90% of its income. Crown Prince Mohammed bin Salman's high-profile 'Vision 2030' initiative, involving substantial investments totalling nearly a trillion pounds, has led to ambitious projects like an expansive urban development on the West Coast and the recruitment of renowned sports stars such as Cristiano Ronaldo and Neymar Jr.
Additionally, petrol prices are influenced by the exchange rate between Great British Pounds and the US Dollar, given that crude oil is traded in USD. If the pound weakens, fuel expenses tend to escalate for British drivers. Oil market expert Livia Gallarati claimed the international oil price could soon exceed $90 per barrel, translating to approximately £71.
Expected Changes to Petrol Prices
Motorists need not expect substantial increases in petrol prices unless retailers opt to augment their profit margin. Conversely, diesel prices often experience seasonal upticks during cold snaps, as numerous countries rely on diesel for heating.
Petrol vendors collaborate with the Competition and Markets Authority (CMA), the UK's competition watchdog, to facilitate real-time consumer price tracking.
Mythbusting Fuel Efficiency Tips
There are several approaches for budget-conscious drivers to economise on petrol costs. A fixed speed of 56mph is not one of them, however. While this speed is often cited as optimal for efficient fuel consumption, in reality, it’s a misconception. Fuel efficiency varies with different car models, according to the RAC.
For those who have endured hot summer days in an attempt to conserve fuel, there’s good news! The AA says cranking up your car's AC expends extra energy and can accelerate fuel consumption by a surprising 10%. Lowering a window is a better alternative, even though it may generate drag, requiring the engine to work harder at higher speeds and consume more petrol.
The notion that 'coasting' (cruising in neutral or with the clutch pedal depressed) can save petrol is incorrect. Coasting is not only ineffective since fuel use is already reduced when the accelerator is released, but it's also unsafe.
Utilising a cruise control feature can enhance fuel efficiency during journeys. Many modern car models have this function, reducing unnecessary acceleration and abrupt braking and ultimately lightening the engine's burden.
Maintaining proper tyre pressure by topping up the air ensures maximum fuel efficiency. Underinflated tyres create more resistance with the road, resulting in higher petrol consumption. You can usually find the recommended pressure specifications in the vehicle’s handbook or inside a door.
The Connection Between Petrol and Energy Prices
The wholesale electricity market in the UK involves energy generators selling their output to suppliers. All parties involved make continuous efforts to maintain an equilibrium between supply and demand.
According to the National Grid, Britain’s publicly-listed operator, fossil fuels accounted for over 42% of the country's energy consumption last year. While this fraction signifies a sizeable share, it also reflects the movement towards a more environmentally friendly energy mix.
How can you Save Money on Energy?
With so much concern about fuel costs, consumers are looking for ways to save money on their bills more than ever. At UKPower, we can help you compare gas and electricity suppliers to find the cheapest energy prices, switch to a better deal and cut the cost of your energy bills.
Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.