Latest petrol and diesel fuel prices
The latest average UK fuel prices
As of 21st May 2023, are 143.97p for petrol and 150.8p for diesel, according to the RAC.
Fuel prices in the UK reached record highs in 2022, with the average price of petrol hitting 191.53p-per-litre and diesel reaching 199.05p in July.
Although fuel prices in the UK have fallen in recent months, there is still a considerable difference between petrol and diesel prices - currently 11.75p a litre
The RAC is concerned
That drivers are being charged over the odds for diesel. This is despite diesel being cheaper for retailers to buy on the wholesale market for all of April 2023.
This remains bad news for drivers amid the cost of living crisis, with the rate of inflation still above 10%, driven by the cost of housing and bills.
Some good news is that fuel prices are steadily coming down compared to 2022 when the average price of unleaded was 165.06p with diesel an eye-watering 178.13p.
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Why are fuel prices still so high?
The simple explanation is that the cost of a barrel of oil has risen. In 2020 the wholesale price of a barrel of crude oil was around $40.
At the start of January 2022 the cost of oil was $79 but this had risen to $92 by the end of the month and went above $100 per barrel after Russia (the second largest oil producer in the world) invaded neighbouring Ukraine on 24 February 2022, making traders worried about disruption to the global supply chain.
On 1 March 2022 the price of oil had jumped to $112.99 a barrel in response to the Russia-Ukraine war. The RAC predicted this was likely to take the average price of petrol towards 155p a litre and diesel to 160p.
The price of oil
Went on to hit $137.72 a barrel on 8 March 2022 - the highest it has been since 2008, although it fell to $109.98 by the end of the month.
In August 2022 the price of oil dropped under $100 and finished the month on $90.63 a barrel. Prices cames down further in 2023 and by May, the price of a barrel of oil was down to $72.50
When the price of oil rises, fuel retailers usually pass on the cost to consumers at the pumps although they can absorb some of the increases. However, when wholesale prices fall, retailers are reluctant to pass the savings on.
Indeed, fuel retailers have an important role to play in fuel prices. Competition between the 'big four' supermarkets Asda, Tesco, Morrisons and Sainsbury's has helped to reduce prices in the past - when one supermarket giant cuts their fuel prices others often follow.
In 2023
Fuel retailers are once again being heavily criticised for not cutting the cost of fuel at the pumps when the price of oil is dropping.
April 2023 saw a litre of wholesale diesel cost 104.88p – down 9p in the month – whereas unleaded was 111.25p - down 6p.
Despite there being just a 6p difference between the wholesale prices of both diesel and petrol throughout all of April 2023, diesel pump prices are currently almost 12p more than petrol.
According to RAC Fuel Watch, figures show that retailers are today taking an average margin of nearly 22p for every litre of diesel they sell, which is more than double what they took through 2021 and 2022 (average of 9p), and more than three times as much as they did at the start of last year (average of 6p).
The UK Government
Also has a major influence on fuel prices as both fuel duty (currently 52.95pp) and VAT (standard 20% rate) make up the majority of the price of petrol and diesel.
Fuel duty was frozen from March 2011 to March 2023, bringing some relief for drivers in the midst of rising prices, while the former Chancellor Rishi Sunak lowered it by 5ppl in the Spring Budget 2023.
When the Government introduced E10 petrol in England, Scotland and Wales in September 2021 it had an impact on fuel prices as ethanol is more expensive than petrol.
Other factors which influence wholesale prices, according to the RAC, are: oil refinery production and capacity, the pound to dollar exchange rate, as refined fuel is sold in US dollars per metric tonne and distribution costs.
