Petrol prices have hit a record high across the UK in what the RAC has described as a “truly dark day for drivers”.
The average daily price per litre hit 142.94p on Sunday in data reported on Monday morning by RAC/Experian Catalist, which is separate from the weekly average record price reported by government.
The previous record was 142.48p in April 2012.
Diesel reached 146.50p a litre on Sunday – still 1.43p short of its April 2012 all-time high of 147.93p.
The price of unleaded has rocketed by 28p a litre from 114.5p in October 2020, adding £15 to the cost of filling up a 55-litre family car, according to RAC Fuel Watch.
It comes as oil prices worldwide continue to climb, with the benchmark Brent crude increasing 56 cents, or 0.7%, to $86.09 a barrel, following on from last Friday’s 1.1% gain.
RAC fuel spokesman Simon Williams said: “This is truly a dark day for drivers, and one which we hoped we wouldn’t see again after the high prices of April 2012. This will hurt many household budgets and no doubt have knock-on implications for the wider economy.
“The big question now is: where will it stop and what price will petrol hit? If oil gets to $100 a barrel, we could very easily see the average price climb to 150p a litre.
“Even though many people aren’t driving quite as much as they have in the past due to the pandemic, drivers tell us they are more reliant on their cars now than they have been in years, and many simply don’t have a choice but to drive.
Why are petrol prices so high in the UK?
The main reason is the jump in crude prices worldwide (in January the price was just over $50 a barrel and in October it pushed over $86), but this is not the only factor affecting petrol prices in the UK.
In September the UK switched to E10 petrol in an effort to be greener.
This meant the bio content of unleaded increased from 5% ethanol to 10%.
Ethanol is more expensive than petrol and the change added around a penny a litre to the cost, according to RAC figures.
This could rise even further as the price of ethanol has gone up by 52% since E10 was introduced.
The bio and petrol components of each litre add up to around 50p.
Then you have the various taxes that are added to that cost:
Duty sits at 57.95p a litre and VAT currently equates to nearly 24p.
The VAT, of course, is applied on top of all other elements of the petrol price including duty and retailer margin.
Since April 2020 retailers have also increased their average margin on a litre by 2p from around 5.5p to 7.5p a litre.
The amount of petrol sold at the pumps plummeted when most of us stayed home during the first UK lockdown last year.
Retailers, particularly the smaller independent ones, are now trying to balance the books.
“There’s a risk those on lower incomes who have to drive to work will seriously struggle to find the extra money for the petrol they so badly need.
“We urge the government to help ease the burden at the pumps by temporarily reducing VAT, and for the biggest retailers to bring the amount they make on every litre of petrol back down to the level it was prior to the pandemic.”
The situation for petrol is unlikely to improve soon, with analysts forecasting Brent crude prices to remain high for the rest of the year.
US investment bank Goldman Sachs is among those to predict that Brent crude could reach $90 a barrel by the end of 2021, blaming a rebound in demand from Asia following pandemic re-openings.
Elsewhere, India and France are also among the countries to have seen record highs in recent days, although – like in the UK – their petrol prices are inflated by massive fuel taxes.
In the UK, tax accounts for 57% of the average retail price for a litre of petrol, according to the RAC.
The AA said the high petrol prices could lead more drivers to consider switching to electric vehicles, with electricity prices as low as 4.5p per kWh off peak at home.
The organisation’s fuel spokesman Luke Bosdet said: “Whether it’s down to oil producers, market speculators, Treasury taxes or struggling retailers trying to balance their margins, record pump prices must be saying to drivers with the means that it is time to make the switch to electric.
“As for poorer motorists, many of them now facing daily charges to drive in cities, there is no escape. It’s a return to cutting back on other consumer spending, perhaps even heating or food, to keep the car that gets them to work on the road.”
The record-high prices come just weeks after much of the UK saw fuel shortages due to a lack of tanker drivers.
Ron Smith, senior oil and gas analyst at BCS Global Markets, said this shortage would also continue to affect motorists, adding: “The problem for motorists is only partly one of higher prices.
“As or more important for many will be the ability to get petrol at any price, given the lack of fuel at forecourts across the country.
“Of course, even if the trucking situation is solved, petrol prices seem likely to remain elevated for the coming months due to the simple reason that crude prices have risen substantially.”