Petrol prices hit an all-time high on Sunday, October 24, according to new figures from the RAC’s Fuel Watch initiative. The motoring organisation’s scheme, which monitors fuel prices, says the average litre of unleaded now costs 142.94p, breaking a record set in April of 2012.
The RAC says the price of petrol has risen by 28p per litre in 12 months, with prices at around 114p per litre this time last year. The organisation says that has added £15 to the cost of filling the 55-litre fuel tank of a typical family car, taking the total cost to £78.61.
That increase was largely driven by rising oil prices, which have doubled from around $40 a barrel in 2020 to $85 a barrel now. And the RAC says some predict prices will continue to increase to around $90 by the end of the year.
Other reasons for the increase include the switch from E5 to E10 petrol. Five percent of the old E5 mix was eco-friendly bioethanol, but that has doubled to 10 percent with the arrival of E10 fuel on September 1. However, ethanol is more expensive than petrol, and the change has added around a penny a litre to the price of unleaded.
As a result, the bioethanol content of petrol now accounts for 8.5p of the before-VAT cost of a litre of fuel, while pure petrol makes up 41p of the total. However, fuel duty adds around 60p a litre to the price of petrol, and VAT currently equates to around 24p. In total, tax costs make up more than 80p a litre.
“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,” said RAC fuel spokesperson Simon Williams. “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 as much as they have in the past due to the pandemic, drivers tell us they are just as reliant on their cars, and many simply don’t have a choice but to drive. 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.”