November was the fourth consecutive month of petrol price cuts and diesel was down too, but experts say fuel is still overpriced
Petrol and diesel pump prices both fell by around half a pence in November, but fuel prices are still higher than they should be, according to experts.
November was the fourth consecutive month of petrol pump price cuts, with the UK average cost of a litre of petrol falling by 0.48p from 126.41p to 125.93p. Diesel, meanwhile, dropped 0.44p month-on-month from 130.27p to 129.83p.
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The figures, which come from RAC Fuel Watch, show that the cost of filling an average 55-litre family with petrol is £69.26, or £71.41 with diesel.
According to some, though, these price cuts are not as substantial as they should be. Simon Williams, RAC fuel spokesperson, said: “Looking at the wholesale price of both petrol and diesel, retailers of all sizes should be cutting at the pump.
“As it stands, unleaded should come down by 5p a litre and diesel by 4p. We would like to think retailers are about to pass these savings on in the expensive run-up to Christmas.”
UK petrol prices
The average UK price for a litre of petrol was 125.93p in November. The cheapest supermarket to buy from was ASDA, which charged 119.70p per litre – 1.77p less than its nearest rival, Tesco.
Regionally, London became the most expensive place to purchase petrol, while Northern Ireland remained the cheapest. See the full regional breakdown in the table below:
Yorkshire And The Humber
UK diesel prices
The average UK price of a litre of diesel was 129.83p in November. ASDA was the cheapest supermarket to fill up with the fuel type, charging 1.68p less than Tesco and around 2p less than Morrisons and Sainsbury’s.
Northern Ireland was the region charging the lowest average price for diesel, while South East England continued having the highest pump prices. See the below table for the full regional breakdown:
Yorkshire And The Humber
What makes up the price of UK fuel?
The price of fuel can be divided into three sections; the taxes imposed by the Government, the costs of drilling, refining and transporting, and the profit margins for the fuel companies.
For petrol, diesel and bioethanols, the Government gets around 65 per cent of the overall cost through fuel duty and value added tax (VAT). The fuel duty represents the fixed price of fuel – it stays the same regardless how much overall oil prices fluctuate. Currently, the Treasury adds 57.95 pence to each litre of fuel through fuel duty, and another 20 per cent through VAT. How much you pay in VAT depends on how much fuel you purchase.
The second biggest chunk comes from the wholesale costs of the fuel itself. The wholesale cost is a combination of currency exchange rates, global oil prices, and even domestic supply and demand.
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Finally, the smallest share of what motorists have to pay for fuel comes from the filling stations themselves. A typical fuel station profits around 2p-5p per litre, but tough competition can drive this down further. Supermarkets increasingly use fuel prices as a loss leader to tempt customers in.
Why is supermarket fuel cheaper than an independent forecourt?
Supermarket forecourts usually offer the cheapest fuel prices and this is because of the market power supermarkets hold. Companies like Asda, Tesco, Sainsbury’s and Morrisons are all in competition with one another, so they keep fuel prices as low as possible hoping that when motorists come to fill their tank, they might do their weekly grocery shopping, too.
There are persistent rumours that supermarket fuel contains fewer additives and is of lesser quality than fuel from traditional forecourts, but there’s little hard evidence of this. All fuel sold in the UK has to abide by the standards set in the Motor Fuel Regulation.
Why is fuel so expensive on motorways?
Motorway fuel stations argue the reason their prices are higher is that many of them are open 24 hours a day and offer more services than a regular forecourt. Motorway fuel stations also pay high rent prices for the buildings they operate.
In more remote areas, fuel is often more expensive because of the higher transport and supply costs, but according to RAC fuel spokesman Simon Williams, this doesn’t apply to motorway stations: “We can see no reason why motorway fuel should be so much more expensive. In fact, arguably it is much easier from a delivery point of view than it is getting fuel to urban filling stations.”
Why is diesel more expensive than petrol?
Although diesel and petrol are taxed the same by the Treasury, historically diesel has been more expensive than petrol, as domestic refineries have struggled to meet demand. This has forced the UK to import diesel from other countries at a greater rate than petrol. In addition, diesel prices are pushed up by the cost of the additives that go into the fuel.
Furthermore, the gap between UK petrol and diesel prices widens during the winter. The end of the US “driving season” means retailers have a surplus of petrol they can’t export, so they sell it here at a lower price. Diesel demand, meanwhile, increases across continental Europe, where the fuel is commonly used in heating oil.
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However, the influx of cheap diesel from countries like Saudi Arabia has turned the tide, swinging diesel wholesale prices closer to that of petrol, and bringing the pump price down with it.
What’s your view on fuel prices in the UK? Do we pay too much for our petrol and diesel? What would you do about it? Join the debate in our comments section below…