So I’m sure it is common knowledge by now, but if you didn’t know… fuel prices are at an all time high! October 24th 2021 was a dark day for all ICE car owners as the fuel prices reached a whopping 142.94p/litre – beating the former record of 142.48p/litre, held by the year of 2012. And it’s not just petrol, it’s Diesel too! Increasing to 146.5p/litre. Making the commute for those of us who haven’t jumped on board the EV train a complete nightmare! – I thought Halloween was over?
So what is causing this rise? Well, let’s break it down as there are a number of factors effecting the price of fuel in 2021. I believe that the most obvious reason is the rise in worldwide oil prices, rising by 56 cents to $86.09 a barrel. The higher oil prices the higher petrol prices are…Simple! However this is not the sole reason.
The introduction of E10 petrol has also played a part in this increase. E10 was introduced to our pumps back in September in an effort to be greener and more environmentally friendly, resulting in the bio content of unleaded increasing from 5 to 10% ethanol. Ethanol is more expensive than petrol adding a penny a litre to the cost. The price is also not helped by our little friend ‘Supply and Demand’. Since the introduction of E10, the price of ethanol has gone up by 52%! Making the Bio and petrol components of each litre add up to around 50p.
On top of all this, you also have the various taxes adding to that cost. Duty tax currently sits at 57.95p a litre and with VAT on top of that (of 24p) the taxes alone are costing the end user 81.95p – bringing the overall total so far to 131.95p per litre. However, this price is without retailer margin.
Since Covid-19 the amount of petrol sold at pumps plummeted due to people having to stay home during the numerous lockdowns. Retailers took a huge blow during this period and in order to balance their books, have increased their average margin from 2p to around 5.5-7.7p per litre – increasing the overall cost of fuel to what we are seeing today.
So I assume that the biggest question on everybody’s lips is when will these prices reduce?! The RAC fuel spokesman Simon Williams said “ Where will it stop? And what price will petrol hit? If oil reaches $100 a barrel, we could very easily see the average price climb to 150p per litre” – “There’s a real risk that those on lower incomes who have to drive for work will seriously struggle to find extra money for the petrol they need so badly”. It’s hard to see when these prices will fall back to the ‘norm’.
For me, I think I’d settle for something just slightly more affordable for now. The most obvious action that the government can do is at least reduce VAT to bring the prices down a tad. But it also falls onto the big retailers to reduce their margins to pre pandemic levels. Only time will tell, but with the analysts forecasting the price of oil to remain high, the change will not be happening any time soon. All the more reason to ensure you drive efficiently as possible!
The alternative is to, of course, switch to EV. If you are into your conspiracies, you could say that this is all just a government ploy to increase EV sales in an attempt to reach our CO2 targets. And who am I to tell you if you are right or wrong. However it does seem timely! But with electricity prices as low as 4.5p per kWH (off peak at home) you can really start seeing the benefits that EV brings.
Struggling to find an EV to suit your needs? Check back in next week where we look into and analyse a number of EV models to ensure you get the perfect car for you.