According to the latest data from RAC Fuel Watch, petrol prices experienced a significant increase in August, making it the fifth largest monthly rise in the past 23 years. Diesel prices also saw a substantial increase, ranking it as the sixth highest leap. The average price of unleaded petrol at the end of August was 152.25p per litre, representing a rise of 6.68p from the start of the month. This increase translates to an additional cost of nearly £4 for a full tank of petrol. Similarly, diesel prices rose from 146.36p to 154.37p per litre.
The surge in fuel prices can be attributed to the soaring price of oil. Since July, the cost of oil has increased by almost $12, reaching $86.86 per barrel. This rise is a result of OPEC+ (often referred to as a ‘cartel’), a producer group, reducing the supply of oil. Consequently, the wholesale cost of fuel, which retailers pay, has increased and has been passed on to consumers at the petrol station.
Simon Williams, a spokesperson for RAC Fuel Watch, expressed drivers’ frustration over the substantial price increase. He noted that drivers had become accustomed to lower prices compared to the record highs witnessed last summer. The sudden rise in fuel costs has been particularly burdensome for those who travel long distances or own older, less fuel-efficient vehicles.
The RAC highlights two factors that may limit future price rises: concerns regarding the Chinese economy’s health and the conclusion of the summer driving season in the US. Additionally, recent intervention by the Competition and Markets Authority (CMA) has prevented fuel prices from rising as much as they potentially could have.
Williams added that although the price increase is unfavorable for drivers, it could have been worse if major retailers had not adjusted their inflated margins, allowing for more normal pricing as wholesale fuel costs rose. Wholesale costs for petrol and diesel began to rise in late July when oil prices reached $85 per barrel. Retailers had no choice but to pass on these increased costs to consumers at the pump. However, they appear to have used the wholesale price rise to subtly adjust their margins. Williams hopes that these fairer pump prices will persist as wholesale costs decrease in the future.
The RAC also noted regional disparities in fuel prices, with Northern Ireland, the North East, and North West having the lowest petrol prices, and the South East having the highest prices, with a 4p-per-litre difference compared to Northern Ireland.
In terms of historical context, the price rise in August was only surpassed by three other months in recent years: March 2022 (11.61p), May 2022 (11.15p), and June 2022 (16.59p), which followed Russia’s invasion of Ukraine, as well as October 2021 (7.43p). The increase in diesel prices was also exceeded by March 2022 (22.06p), June 2022 (15.62p), October 2022 (10.14p), as well as October 2021 (8.16p) and May 2008 (8.43p), which was shortly before oil reached its record high price of $144 a barrel.
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