UK drivers are paying more at the pumps after another run of price increases. The RAC says the average price of unleaded has risen more than 14p a litre to 147.19p since the end of February. That means £8 more to fill a family car, which now costs £81. Petrol was last at this level in early June 2024.
Diesel drivers are paying even more. A litre has come up 29p to 171.17p, the highest price for more than three years, since mid January 2023. Filling a tank now costs £94, which is £16 more than at the start of the conflict in the Middle East, according to the RAC.
Simon Williams, RAC head of policy, said: “Given how many rely on their cars, households are really feeling the effects of the conflict in the Middle East. The average price of unleaded has now risen more than 14p a litre to 147.19p since the end of February, adding £8 to the cost of filling up a family car which currently stands at £81. Petrol was last this high in early June 2024.”
He added: “For drivers of diesel vehicles, the situation is far worse, with a litre up 29p to 171.17p, its highest price for more than three years (mid-January 2023). This means a tank now costs £94, £16 more than it did at the start of the conflict. As a barrel of oil has been trading well over $100 for the last three days and looks set to remain at that level, drivers are in for a rough ride at the pumps in the run-up to the Easter break with no end to price increases in sight.
“With the price of petrol likely to go above 150p a litre in the next week and diesel heading to 180p, it’s looking like it will be the most expensive Easter on the roads since the early days of the war in Ukraine in 2022.”
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How Much Of What You Pay Is Tax?
A large proportion of the pump price goes straight to the Treasury. Fuel duty is set at 52.95p per litre and VAT is 20%. The total amount paid in tax depends on the pump price.
The RAC explains that at 120p a litre, 65% of the cost is tax. At £1 a litre it rises to 75%, meaning 75p in every litre sold goes to the Treasury. Fuel duty raises more than £26bn a year. Together with VAT on fuel, vehicle tax and showroom tax, motorists contribute more than £40bn a year to government funds.
There is also a limit to how low prices can go. Even if retailers made no margin, duty and VAT would stay the same. The duty rate was cut to 52.95p in 2022 after the Russian invasion of Ukraine and in the Budget on 30 October 2024 it was confirmed that this rate would stay in place from Spring 2025.
Why Do Prices Differ From One Forecourt To Another?
Drivers can see big price differences over short distances. In March 2024, an RAC investigation for ITV’s Tonight programme found a 27p per litre difference between two filling stations only a short drive apart.
The RAC runs Fuel Watch, its petrol and diesel price monitoring initiative. It says: “Fuel Watch, the RAC’s petrol and diesel price monitoring initiative, helps ensure retailers charge a fair price at all the UK’s forecourts. We monitor wholesale prices – those retailers pay – and pump prices daily, covering the UK’s big four supermarkets (Asda, Costco, Tesco, Sainsbury’s and Morrisons), plus many other brands. And, when wholesale prices dip, we call on retailers to pass on the savings they are benefiting from to drivers at the pumps.”
Retailers can change prices when wholesale costs rise or go down. Supermarkets have strong influence. They operate around 16% of UK forecourts but account for about 44% of total fuel sales, according to the RAC. When they adjust prices, other sites often follow.
Location also has an effect in that rural areas can be dearer where distances from fuel terminals are longer. The Government introduced a 5p rural fuel duty discount in 2012 in the Inner and Outer Hebrides, the Northern Isles and the Isles of Scilly. In March 2015 this was extended to 10 rural mainland communities.
Filling up costs drivers way more than it did at the start of the conflict, and diesel drivers feel it most. That Easter getaway looks set to cost more at the pump than many hoped.
