Will petrol prices go down? Why UK cost of fuel is still rising and when price could drop if fuel duty is cut
Warning that widely expected cut in fuel levy might not reach drivers as retailers continue to push up prices
UK drivers may not fully benefit from a rumoured reduction in fuel duty as fuel prices continue to soar around the country.
Petrol costs have risen to more than £1.67 per litre and diesel has exceeded £1.79 a litre.
Petrol is now 16p per litre more than at the start of March, with diesel 14.5p per litre more and there are fears that moves to ease pressure at the pumps may not be passed on to drivers.
According to the latest figures from the RAC Fuel Watch service, filling up an average 55-litre family car now costs £92.01 for petrol and £98.85 for diesel, up from £67.97 and £69.67 respectively in March 2021.
Oil prices fell earlier in March, raising hopes that forecourt costs could also come down but costs have risen again.
Industry observers now believe a rumoured cut in fuel duty might be the only way drivers see any relief at the pumps and even that might not bring a guaranteed reduction as retailers could simply absorb the reduction and increase their profits.
The daily price rises have been driven by the war in Ukraine and its effect on the global oil and fuel markets, as well as a general increase in demand.
The price per barrel of Brent crude - the most common measure of oil prices - dropped to 109 US dollars on Wednesday 10 March after reaching a record $139 per barrel two days earlier. However, by Monday 21 March it had climbed again to $111.
The RAC’s fuel spokesman Simon Williams said drivers were now unlikely to see any benefit from the previous price drops as retailers maintained their record-high prices.
He said that even a reduction in fuel duty might not lead to the hoped-for relief at the pumps, with a risk retailers would simply increase their profit margins.
He said: “Unfortunately, Monday’s break from daily rising prices was far too short-lived, especially as wholesale petrol costs are down and should be being passed on to drivers at the pumps. The biggest retailers are once again letting drivers down by not charging lower prices while they can. Instead, they appear to be hedging their bets to protect themselves from future increased wholesale costs.
“This is why we fear a fuel duty cut by the Chancellor in the Spring Statement could be swallowed up by retailers to the detriment of hard-pressed drivers.”
Mr Williams said a 5% reduction in VAT would be a “fairer and more powerful” method of helping hard-pressed drivers.
He told National World: “A 5p per litre reduction in duty would only save around 6p per litre after VAT but that could be absorbed by retailers. A 5% reduction in the VAT at the end of a transaction would save drivers around 7-8p per litre and be much fairer for them.”
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