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Petrol prices hit an all-time high... and it might even get worse

  •   3 min reads
Petrol prices hit an all-time high... and it might even get worse

With the recent oil crisis, has come an increase in huge petrol prices all across the United Kingdom reaching 142,9pound on average per unleaded litre and 146,5p for diesel.

As Royal Automobile Club’s Fuel Watch spokesperson Simon Williams would say, it is a « truly dark day for drivers ».  As the average unleaded price reached 142,9p per litre on Sunday the 24th of October, the previous record of 142,48p set in 2012 has been shattered after a year of continuous price rise. Since October 2020, the unleaded price has increased sharply by 28p (starting at 114,5p), resulting in a £15 addition to a full 55-litre tank of a typical family car, going from £63 then to £78,61 now.

Oil, Brexit and potential lockdown: motors of this fuel crisis

This drastic increase goes in line and is a direct consequence of the global oil market prices' sudden growth. The more expensive crude oil is, the more expensive diesel and petrol become. And unfortunately, the oil will probably not get cheaper at all. Due to the post-pandemic rise in energy demand, oil prices have more than doubled in a year, starting at £29 a barrel to about £62 in recent weeks.

As Asia's appetite for crude is once again increasing after the Delta Covid-19 wave, US bank Goldman Sachs expects the global oil demand to reach pre-pandemic levels of about 100 million barrels a day "shortly". This could end up in an even worse situation as the oil price could climb up to £66 by the end of the year. To scare us even more, the Bank of America even predicts that a cold winter could lead to a £73 barrel, which would be a mark unseen since 2008.

Not only did the oil market know a huge crisis, but UK's gas stations also did as well. With the fear of another lockdown growing, British people have more than ever used gas pumps this last month to prepare themselves for another potential quarantine. Nonetheless, gas stations were invaded by drivers, but not by tankers. With Brexit coming into play, foreign petrol trucks have been reluctant to cross the border to deliver their loads. Thus, the UK's government even had to deploy its army to help deliver petrol to garages.

Where is petrol price heading?

If the oil situation gets to this point in the next few months and, the petrol price will also increase and reach even higher numbers. We are still far from seeing an average national price of 184,9p as seen in a small gas station in the Highlands, Scotland (which is believed to be the highest in the UK), but Simon Williams pictures a real scenario where

we could very easily see the average price climb to 150p a litre. [This would] hurt many household budgets and no doubt have knock-on implications for the wider economy.

According to statista.com, close to 90% of British are still using gas as their main heating source. Thus, with winter and its need for heating coming, more than 23 million families, especially lower incomes ones, might end up struggling a lot to pay their tax bills in the next few months if the petrol price keeps on growing and growing.

A shed of light in this gloomy situation

Despite the current rate of 57,95p a litre being frozen since 2011, many Londoners feared the fuel duty will grow. Fortunately, in his autumn budget release, UK Chancellor Rishi Sunak has moved away from his expected and planned decision.

I’m not prepared to add to the squeeze on families and small businesses, so I can confirm from today the planned rise in fuel duty will be cancelled.

Even with the virus and the lockdown restrictions reducing personal vehicle use, the government is expected to receive around £21 billion from fuel duty in the 2020-2021 financial year. The bill, which was £6 billion more last year, might soon be balanced by the London Ultra-Low Emissions Zone charge coming into place in the capital and maybe in other cities in the upcoming years.

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