Rising Fuel Prices
The rising cost of fuel has long been documented in the press, but what are the causes and effects?
The price of oil largely dictates what the customer pays at the pump, and since January 2021, that price has been rising. At that point, the cost of a barrel of oil was around £55, but with that same barrel likely to cost around £98 in today’s market, it’s easy to see why filling up is that bit more painful now than it was then. The reason for that price hike is simple – supply and demand. During the pandemic, we were all travelling less and therefore using less fuel. Now that the world is re-opening and people are commuting and travelling once more, suppliers cannot keep up with demand and therefore prices have risen by close to double as a result.
There is of course Russia’s war in Ukraine to consider too. Russia is the world’s third largest oil producer, supplying around 10% of all fuel globally. With the sanctions imposed on Russia and oil being one of the main bargaining chips for Putin, this too is contributing to the squeeze.
Fuel prices have now dropped slightly from their peak earlier this year, and the 5p cut in fuel duty has helped, but with many now also being hit by the sharp rise in energy costs too, there is little relief. Simon Williams from the RAC has suggested that the cut in fuel duty is not reaching consumers pockets however, saying: “The biggest retailers are once again letting drivers down by not charging lower prices while they can. Instead, they appear to be hedging their bets to protect themselves from future increased wholesale costs.”
The Road Haulage Association (RHA), backed by forty senior parliamentarians, has written to Chancellor Rishi Sunak, requesting that a 15p per litre rebate is given to hauliers and coach operators. That rebate could be vital to ensure that costs are not passed on to the everyday consumer. If it costs more to transport goods, those costs will soon be passed on from hauliers to retailers and from retailers to consumers – another unwelcome squeeze on UK households at an already challenging time.
