Drivers need to brace themselves for ‘potentially dramatic’ pump price increases as the cost of oil continues to rise, the RAC has said today.
The price of a barrel of oil has returned to January 2020 levels – around $64 a barrel – though the RAC has said that analysts predict it could go as high as $80 this year as pandemic restrictions ease, sending fuel prices skyward.
Forecourts are being stopped from pushing up their prices at the moment due to the stronger pound to dollar exchange rate, given that oil is traded in US dollars. However, any weakening of the pound or further increases to the price of oil will ‘very likely lead’ to higher costs for drivers.
Simon Williams, RAC fuel spokesperson, said: “When the pandemic hit last year, the effect on forecourt prices was nothing if not dramatic – those still driving through March and April paid less to fill up than they had done since mid-2016, when the price of oil plummeted as a result of deliberate over production.”
“But by the summer the oil price had rebounded and today is at a level not seen since the start of 2020, meaning 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’s likely to mean drivers end up paying more to fill up in the coming weeks.”
The price of oil dropped to just $13 last April, but has since recovered – rising by $20 in just three months. If it rises as high as $80 as some analysts predict, petrol prices could rise to around 130p a litre and diesel to 134.5p a litre based on today’s exchange rate remaining the same.
Data from RAC Fuel Watch has shown that petrol prices have already been rising for 13 consecutive weeks, with a litre now 8.03p more expensive than it was at the end of November last year at 121.84p a litre. Diesel has been on the rise for 14 straight weeks, up 7.68p since November 15, 2020, to 124.91p a litre.
Williams added: “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 now been rising for 13 consecutive weeks. A hike in duty at a time of rising fuel prices could put unprecedented pressure on lower-income households and might have the negative effect of forcing everyone who depends on their cars to consider cutting back on other spending.”