Fuel prices to soar over crisis

File photo dated 13/09/05 of a person using a petrol pump as British drivers are still facing a huge petrol and diesel  tax burden despite three years of fuel duty freezes, according to the RAC Foundation. PRESS ASSOCIATION Photo. Issue date: Monday March 3, 2014. The UK has the highest rate of diesel tax in Europe while only Sweden imposes a higher petrol tax duty than the UK, the foundation said. Its figures showed that tax accounts for 59% of the price of diesel in the UK, with Sweden (56%) second and Italy (55%) third. As much as 61% of the price of petrol in the UK is down to tax, with Swedes (62%) paying the most in tax and the Netherlands (61%) paying the same. See PA story TRANSPORT Petrol. Photo credit should read: Danny Lawson/PA Wire

%VIRTUAL-SkimlinksPromo%The crisis in Ukraine will lead to petrol and diesel prices rising in the coming weeks, according to the RAC.

It said fuel traders had already begun to buy up stocks to guard against being caught out in the event of the situation worsening.
This will cause prices to increase due to a tightening in supply. And, to make matters worse, the price of oil will almost certainly be negatively affected, further increasing fuel costs and, in turn, forecourt prices, the RAC said.

The motoring organisation said that British motorists had enjoyed more than a month of the lowest average pump prices for three years, with petrol below 130p a litre.

The low forecourt prices were a result of fuel retailers passing on savings in the wholesale price which had eased in mid-January to around 100p a litre for petrol and 129p for diesel.

However, even before the appearance of Russian troops in Ukraine, wholesale prices had begun to rise again as a result of the pound losing ground against the dollar (despite it being around 12% stronger than it was a year ago) and oil stocks declining, thereby causing prices to rise.

RAC head of external affairs Pete Williams said: "While savings were only small, at 129p a litre the price was 11p cheaper than it was in early March last year which meant a saving of around £6 on a tank of petrol for an average family car like a Ford Focus and £5 for a tank of diesel.

"The tensions in Ukraine, brought about by Russia's unprecedented move, will unfortunately affect everyone driving a vehicle in the UK as the fuel market is intrinsically linked to major international political events."

He went on: "While we can all only hope for a speedy resolution to this situation, from a motorists' perspective we really need the pound to continue performing well against the dollar as this could help to offset some of the inevitable price rises."

AA spokesman Luke Bosdet said: "Experience from previous crises shows that commodity market speculation tends to be a greater problem than the actual threat to supply.

"Over recent weeks, reduced oil flow from Libya has put upward pressure on the price of oil yet it has had little impact on the UK pump price. This is primarily due to the strength of the pound.

"The average price of petrol is 10p a litre lower than a year ago, when it peaked at 140p a litre. Now it is still below 130p. The two dollars a barrel rise in today's Brent oil price represents a possible 1p rise in the pump price of petrol, but only if sustained."

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