With petrol prices already high despite the current restrictions on driving, the RAC has warned that they may not yet have reached their peak and could soar after lockdown ends.
The concern comes after the revelation that the price of petrol in the week beginning 15th February was up to 122p-a-litre, jumping from 114p-a-litre in December.
During the first half of the pandemic, back in March 2020, petrol prices reached a low of just 106.48p-a-litre due to travel restrictions and lack of demand, but the price has been rising steadily ever since. For example, just in January of this year, it was revealed that motorists were paying up to £3 more than they were in March 2020 to fill up the average family-sized car with a 55-litre tank.
As restrictions begin to lift, however, and demand increases, petrol prices are set to sky-rocket.
After the current lockdown ends, we could see these numbers rise again to record highs of 143p-a-litre for petrol and 148p-a-litre for diesel, says the RAC.
Reasoning behind the sharp predicted rise is based on the assumed jump in the cost of oil due to the rolling out of the global Covid vaccination programme, which will have increased travel and pushed prices upwards.
Some analysts have predicted that this year, the price of oil could reach $80-a-barrel, while JPMorgan has indicated that in 2022, it may reach highs of $100-a-barrel, resulting in those much higher petrol and diesel prices.
Expert motoring organisations are concerned that, with the impact of Covid and lockdowns on people’s personal finances, the hike in petrol prices may not be viable for many motorists up and down the country.
The AA’s fuel price spokesman, Luke Bosdet, stated that: ‘As they struggle to get their working lives and family financiers back on an even keel after Covid, there is going to be a real sense of being under assault for needing to drive a car.
‘The bonus that the fuel trade is giving itself is just part of the financial pressure likely to be heaped on drivers this year – particularly those on lower incomes.’
There are also concerns that when the Chancellor announces the Budget next week, the freeze on fuel duty could come to an end, causing the price of petrol to rise further and pose even more of an issue for those struggling financially.
AA fuel price spokesman, Simon Williams, commented that: ‘With the Chancellor’s Budget now less than two weeks away, the last thing drivers, and possibly the economy, need is a fuel duty increase – not least as petrol prices have been rising for thirteen consecutive weeks.
‘A hike in duty at a time of rising fuel prices could put unprecedented pressure on lower-income households and might have a negative effect of forcing everyone who depends on their cars to consider cutting back on other spending.’
[Image Source: Shutterstock, February 2021]
What impact will fuel duty have on petrol prices?
Fuel duty has been frozen since March 2011, saving motorists around £1,2000 in the last decade, but the freeze may no longer be possible, with Chancellor, Rishi Sunak, saying that ‘we can no longer afford’ to do so.
Reports state that fuel duty, if unfrozen, could rise by 5p-a-litre in next month’s Budget.
As aforementioned, this has understandably raised concerns about the impact this would have on petrol prices, particularly in a time of such economic hardship due to the pandemic.
The RAC’s Simon Williams explained that: ‘The Chancellor faces a difficult decision as to whether to pile further misery on drivers by raising fuel duty when pump prices are on this rise and many household incomes are being squeezed.’
When speaking to ITV News, Mr Williams also commented that: ‘Storm clouds are once again gathering over UK forecourts.’
‘Ironically and rather unfortunately, as economic confidence grows as measures to combat the coronavirus take effect it is likely to mean drivers end up paying more to fill up in the coming weeks.’
While the loosening of pandemic induced restrictions is a positive step forward in many ways, it seems that the motorists will have to bear the brunt of the impact Covid-19 has had on the price of petrol.
Are you concerned that petrol prices will remain high after the lockdown ends? Do you think now is the right time for Rishi Sunak to revoke the freeze on fuel duty?
Let us know your thoughts in the comments.
Exorbitant fuel tax creates a disproportionate tax burden on people like myself in the transport industry.
We pay 65-70% government tax (plus 20% VAT on that tax!) on every litre we put into our vehicles – something without which we can’t earn a living.
Then like everyone else, after our profits have already been smashed, we still have to pay income tax on what little is left.
Meanwhile those who either work from home or close to home aren’t affected by this discriminatory tax at all!
It’s pure discrimination, and a disgrace in what’s supposed to be a ‘fair’ society.
Given the current value of the pound and the reduced demand fir petrol and diesel also the fact that there are tankers parked up off islands in Scotland full of oil which they cannot offload due to lack of processing demand I cannot understand why the price is so high other than profiteering by the major oil companies.
It will be interesting to see how many oil chief executives are paid humongous bonuses on the back of grossly inflated profits due to this obscene pricing of petrol and diesel which adversely affects not only motorists but the wider public as these increases in fuel will increase the price of everyday good as the haulage companies will be forced to pass on the fuel increase to their customers who will pass on the increases to the consumer
Yes, I was going to make the same comment about the pound to dollar rate which has increased quite a bit in our favour over the last few months!
Can’t disagree with anything you say sir and I suspect this is a last ditch attempt by the oil companies to fleece us for every penny they can before the transition to electric vehicles. Particularly as they know a lot of people have money they haven’t been able to spend during the pandemic but it won’t be just the oil companies who will be fleecing us in that respect.They have the perfect scenario of a lot of the older generation, who tend to have a lot of that money sitting in bank accounts, deciding to go on holiday in this Country rather than abroad. Like shooting fish in a barrel.
Not so sure the information regarding fuel duty is correct judging by comments/leaks in our mainly right wing press but who knows, motorists are an easy target at the best of times and carbon reduction will be wheeled out as the plausible excuse.
its exactly that. profiteering. any other industry and the monopolies commission would be investigating for price fixing. but because the government use fuel as a ‘cash cow’ and have done for as long as i can remember, they tun a blind eye! with the amount of tax on fuel VED should be abolished completely. either that or keep VED and abolish fuel tax.
As you may expect there is no single answer but like any incident, a number of factors come together at the same time. First take off VAT & Road Fuel Duty. and an average pump price of say £1.24 (diesel or petrol) comes down to 58.92ppl. So by the time you explore, dig, ship, refine, transport, store, retail etc., you can imagine there’s not a lot surplus. Now do remember that a few years back it went up to £1.48 at the pumps, and then collapsed over the next couple of years and remained low since then to the start of 2020. During 2020 a number of events happened as you may recall, some related to weather, some to middle East unrest but most significantly was the OPEC finally agreed to reduce output along with Russia. a major breakthrough for them and a cut in production for the rest of us which started the price going upwards. As we moved into 2021 Demand from a recovering China and India increased. In the USA they had the Ice Storm which shut down refineries and Rigs and caused a shortfall in production there, so the Yanks did what they always do, they bought up oil cargoes which would usually head for Western Europe. The inevitable happened and the price has soared. This at a time when UK demand had fallen, but now with the Lockdown being eased demand in the UK is set to rise. So it is down to supply and demand but Worldwide S&D not just UK. By the way I’m not an oil executive on the huge bonuses that you mention. I run my own Fuel Card business making a few points of a penny to keep my customers happy, so I’m even more effected by this than most people are. best wishes.
Strange that the strength of the pound against the dollar not mentioned in any articles. Oil companies are quick enough to increase the price of fuel when the pound falls against the dollar. Profiteering is the name of the game
This has nothing to do with covid, it is just greed to cover the cost of covid across the board. Once the pandamic lockdown is lifted, more people will be using all forms of transport This only means greater profit for the oil companies, government and corporate greed. What should be happening is this, oil companies lowering prices to help all the people who have been struggling due to the draconic lockdowns. Oil companies will still be making a fortune.
I would suggest a boycott of all oil related fuels. The ordinary people need to stand up to these greedy corporations.
Not a good time to raise fuel duty ❗️❗️❗️