UK fuel prices set to break record

UK fuel prices have surged again. The average price of petrol is likely to pass 137.4p today - it has risen 1.25p a litre this week - while the average price of UK diesel has hit 144.6p a litre, despite a drop in oil prices yesterday.

The AA claims that for a commercial van, with a 80-litre fuel tank, the cost of filling up has soared from £90.90 in February 2010 to £115.68.


No price ease off

"A stronger pound has staved off this moment for longer than might have been expected, but diesel drivers across the country will have been watching in trepidation. They hoped that below-record prices would hold until the spring, when winter price pressures on diesel traditionally ease," says Edmund King, the AA's president.

The sharp hike in fuel costs, particularly diesel, is not just passed onto motorists but also to consumers in terms of high supermarket and general food and goods transportation costs. It had been anticipated that low global 2012 demand for oil would see prices stabilise.
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A number of issues are exerting pressure on oil prices. Regional Middle East unrest - including tensions about Iran's nuclear capability - aren't helping, driving further speculation and volatility.

Oil prices picked up even higher when it was reported Saudi Arabia had suffered a key pipe line explosion, however this has been denied, causing the price of Brent Crude to fall back to just under $125 a barrel from $128.40 yesterday.


Speculation

"With trouble in the Middle East one of the causes, the pattern of oil pricing is looking to mirror last year's – once again inflated by stock market speculation," said the AA's Edward King. "The difference is that, from last year's experience, we know the consumer can't take it."

But the consumer doesn't have an awful lot of choice in the matter, especially those who live in the countryside, who can pay up to 4p extra a litre, claims the Countryside Alliance.

The AA says it has written to George Osborne, calling for an investigation of the oil, refining, fuel and retail markets. The letter also appeals for an end to annual fuel duty hikes while the economy falters - including cancelling the planned rise in August.

However the Chancellor is under great pressure to raise the income tax personal allowance threshold to £10,000 in order to boost the economy; this move will be expensive. Therefore it's unlikely he will give motorists any support in his Budget, despite the oil squeeze.

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UK fuel prices set to break record

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