Brace for £3 a litre for diesel! MPs are warned falling cost of global oil is ‘lull before the storm’ with staggering prospect of prices hitting £2.40 a litre for petrol a ‘definite possibility’
- Average petrol prices at British forecourts hit a record 163.5p per litre yesterday
- That is despite crude oil prices falling back down to £77 ($101) after recent spike
- But energy experts warned falling wholesale prices could be ‘lull before storm’
- Dr Amrita Sen, from Energy Aspect, said petrol prices could rise to £2.40 a litre
Petrol prices could soar as high as £2.40 litre and diesel to £3, energy chiefs last night warned, despite a surprise downturn in the cost of crude oil.
Spiraling wholesale oil costs, sparked by Russia’s invasion of Ukraine, have seen prices at the pump pushed to record levels in Britain in recent weeks.
The average price of petrol at forecourts hit a record £1.63 per litre on Monday – up from £1.48 just a month ago.
Meanwhile diesel, a key fuel for logistic and service vehicles, was at £1.73, up from £1.51 from earlier this year.
The sudden price hike has been yet another blow to Britons already facing a cost of living crisis.
And it has heaped pressure on Rishi Sunak to take action, with motoring groups calling on the Chancellor to cut fuel duty.
The price rise has been driven by rocketing crude oil costs in recent weeks, following Vladimir Putin’s decision to invade Ukraine.
But, in a surprising move, crude oil prices have now begun to fall again, with experts citing lockdowns in several major Chinese cities as a possible explanation.
However average pump prices are yet to fall, and energy have bosses warned the sudden crude oil price drop could just be a ‘lull before the storm’.
Speaking to Parliament’s Treasury Committee yesterday, Dr Amrita Sen, director of research at Energy Aspects, petrol prices could rise to around £2.40 a litre.
She also warned MPs that diesel prices of ‘£2.50 – even closer to £3’ were ‘definitely in the realms of possibility’.
Petrol prices could soar as high as £2.40 litre and diesel as high as £3, energy chiefs last night warned, despite a surprise downturn in the cost of crude oil. Library image
In yet another blow to Britons facing a cost of living crisis, the average price of petrol at forecourts hit a record 163.5p per litre yesterday – up from 148.0p just a month ago. Pictured: Prices at a Shell garage in Lanarkshire on March 1
Speaking to Parliament’s Treasury Committee yesterday, Dr Amrita Sen (pictured), director of research at Energy Aspects, petrol prices could rise to around £2.40 a litre.
Meanwhile, Nathan Piper, head of oil and gas research at financial services company Investec, warned drivers ‘need to get ready for what could be continued increases in fuel prices.’
Mr Piper told the committee: ‘If more stringent actions are imposed upon Russia, and five million barrels a day is truly taken out of the market, then oil prices would really have no ceiling.’
Fuel prices in UK break new records despite drop in wholesale costs
Fuel prices have broken new records as a slump in wholesale costs failed to make an impact at the pumps.
Figures from data firm Experian Catalist show the average cost of a litre of petrol at UK forecourts on Sunday was 163.5p, while diesel was 173.4p.
A month ago, pump prices were 148.0p per litre for petrol and 151.6p per litre for diesel.
Oil prices plummeted last week, leading to a cut in wholesale costs for fuel retailers.
This followed a surge in prices due to supply fears caused by Russia’s invasion of Ukraine.
The price per barrel of Brent crude, the most commonly used way of measuring the UK’s oil price, reached $139 on March 7, which was its highest level in 14 years.
But the price plummeted to $109 two days later, and remains around that level.
Pump prices have risen to record levels in recent weeks, sparked by a huge spike in wholesale crude oil prices.
The price per barrel of Brent crude had reached an eye-watering £106 ($139) on Monday of last week – its highest level in 14 years.
But the price fell to £84 ($109) two days later and, according to Bloomberg, was this morning at around £77 ($101).
Shanti Kelemen chief investment from M&G Wealth said lockdowns in China, including in major manufacturing cities such as Shenzen, had played a role in reducing crude oil prices.
Ms Kelemn told BBC Radio 4’s Today Programme: ‘Over the past few days we’ve had news out of China about several of their large cities that are involved in a lot of manufacturing going into lockdown, for example Shenzhen which is a big tech hub.
‘That has raised concerns. China is a huge importer of energy and if a lot of their manufacturing is closed down because they are trying to maintain this zero Covid policy that will reduce the demand for oil in the short term.
‘I think we will continue to see a lot of volatility depending on the news we get out of Ukraine, and then also what evolves in China over the next few weeks.’
It comes as yesterday it was claimed that a rising numbers of British motorists are driving away from petrol stations without paying – while staff have also reported an increase in threats, aggression and violence.
Families struggling with soaring energy bills saw the average price of petrol at forecourts hit a record 163.5p per litre yesterday, up from 148.0p just a month ago – while diesel was at 173.4p, up from 151.6p a month ago.
Experts said falling wholesale costs are failing to impact pump prices – the data for which is provided by Experian Catalist – after oil prices dropped last week following a surge due to supply fears amid Russia’s invasion of Ukraine.
The price per barrel of Brent crude had reached an eye-watering £106 ($139) on Monday of last week – its highest level in 14 years. But the price fell to £84 ($109) two days later, which is roughly where it remains this morning.
Now, campaigners have revealed there has been a 215 per cent rise in the number of motorists leaving petrol stations without paying when the first week of March 2022 is compared with the first week of December 2021.
The British Oil Security Syndicate (Boss), which aims to reduce forecourt crime, told the Daily Telegraph that the overall cost of this theft to the industry is now estimated to be above £100million, up from £88million in 2019.
And police are now said to be bringing in special measures to reduce forecourt crime, which can also include motorists claiming that they cannot pay for some reason and promising to return later – but then failing to do so.
Cars queue for fuel last week at a petrol station at a Sainsbury’s supermarket in Notting Hill, West London, on March 10
The price crisis has intensified following Russia’s invasion of Ukraine on February 24, although there are hopes that prices at the pump could start to ease after the price of Brent crude began to fall again midway through last week.
Boss managing director Claire Nichol told the Telegraph: ‘Record fuel prices make not paying for fuel more attractive to criminals and early reports indicate forecourt fuel crime has jumped in recent weeks.
‘Reported incidents of unpaid fuel are 215 per cent higher when comparing the number of incidents reported during the first week in March 2022 with reports during the first week in December 2021.
‘In 2019 Boss estimated that unpaid fuel cost UK fore court operators £88million per annum. Lockdowns saw incidents see-saw but since the economy reopened forecourt fuel crime has begun to move back to pre-pandemic levels.’
Also today, RAC fuel spokesman Simon Williams said the average price of petrol ‘appears to be on a collision course with £1.65 a litre’.
He went on: ‘While there will almost certainly be more rises this week, drivers should soon get some respite from pump prices jumping by several pence a litre every day as oil and wholesale prices appear to have settled.
‘The price hikes seen over the weekend are still a result of the oil price rise which began at the start of the month and peaked early last week.
‘As the oil price has now fallen back, we should hopefully reach the peak and start to see prices going the other way to reflect the big drop in wholesale costs seen at the end of last week, subject to no further spikes in the barrel price this week.’
And AA fuel price spokesman Luke Bosdet said today that the 10.6p per litre slump in wholesale costs last week produced ‘bizarre price anomalies’.
He explained: ‘In one town this weekend, filling a tank at one forecourt was more than a pound cheaper than directly across the road at another.
‘They normally match each other but the petrol station resupplied earlier in the week at the much higher price was nearly deserted while its neighbour had a small queue.
‘Unless the price of oil takes off again this week, the AA expects these wild pump prices to stabilise this week and even fall back at fuel stations that were supplied at peak prices but will eventually get cheaper deliveries.’
High fuel prices are seen at a petrol station in Wimborne, Dorset, on March 11 – with unleaded petrol listed at 175.9 a litre
A man fills up some extra containers of fuel at Sainsbury’s petrol station in Cambridge on March 8
Last night, Labour urged the Government to combat the ‘spiralling cost-of-living crisis’ as new analysis by the party suggests families have been hit by a rise in annual petrol costs of nearly £400.
Bills are set to surge again in the autumn if Ukraine conflict is prolonged
By John Stevens for the Daily Mail
A prolonged conflict in Ukraine risks driving a second surge in inflation this autumn, a think-tank has warned.
The Resolution Foundation said poorer households, which spend a higher proportion of their money on food and fuel, will be hit hardest and could see their bills rise by 10 per cent.
The Bank of England has warned that inflation could rise above 7 per cent this year, but the think-tank said it now looked likely to peak at over 8 per cent.
James Smith, of the Resolution Foundation, said: ‘Until recently, the Chancellor was approaching his upcoming Spring Statement with good news on the public finances and little pressure to make any big policy calls.
‘Fast-rising inflation, exacerbated by the conflict in Ukraine, has changed all this. The chances of a living standards recovery this year are receding as rapidly as inflation is rising, and the risk of another recession is looming into view.
‘The Chancellor will therefore need to make some tough, and potentially expensive, choices in how to respond. The top priority should be to protect poorer households, who are most exposed to the biggest cost of living crisis Britain has faced in generations.’
Inflation is already running at its fastest pace in 30 years, with prices rising by 5.5 per cent on average in the 12 months to January.
Separately, the New Economics Foundation said nearly half of all children in Britain will see their families forced to make sacrifices on essentials this spring, such as putting food on the table or replacing clothes and shoes. Its analysis shows that by next month a third of households, or around 23.4million people, will earn less than they need.
Sam Tims, of the think-tank, said: ‘The cost of living is increasing faster than at any point in recent history. But the cost of living is only a crisis when people cannot afford it and government support must be able to flexibly respond to this. There is little time left for the Chancellor to take action to avert the worst real-terms incomes squeeze in 50 years.’
Concerns have been mounting over living costs ahead of a planned hike in national insurance in April, together with rising energy prices, forecasts of increased inflation and uncertainty over the war in Ukraine.
Labour said its analysis of official figures reveals the average family is facing an annual rise of £386 in the cost of petrol.
The total was calculated by taking the increase in the petrol prices over the past year, and an average for the number of cars owned by families across the country, as well as how far they travel.
Labour found the cost of a litre of unleaded petrol increased by 38p from March 2021 to March 2022, and the average family has 1.2 cars and travels 8,040 miles in a year.
Based on the miles-per-gallon (MPG) of an average petrol family car of 36, it said this means on average a household uses 1,015 litres of fuel in a year.
The party therefore found drivers would have shelled out an average of £1,634 in March 2022 compared to £1,248 in March 2021 – a rise of £386.
Meanwhile, Labour reiterated its calls for the Government to cancel the national insurance rise and back a ‘one-off windfall tax’ on the profits of oil and gas producers.
Ministers have decided to push ahead with the health and social care levy in April, which will add to pressure on people’s bank balances as the cost of living continues to climb.
The 1.25 percentage point rise in national insurance is predicted by the Treasury to raise £12billion per year to help tackle the Covid-induced NHS backlog and reform social care in the long term.
Shadow transport secretary Louise Haigh said Labour’s analysis revealed ‘a savage extra cost for millions of working people’.
‘The Conservatives could help working people being hit hard by soaring prices – instead they’ve rejected the choice of a one-off windfall tax on oil and gas producers raking in billions,’ she said.
‘And to add insult to injury, within weeks they want to clobber families with a huge tax hike.’
Ms Haigh added: ‘Labour would put working people first. Our plan would help households through this crisis with up to £600 cut off energy bills, funded by a one-off windfall tax on the booming profits of oil and gas producers.
‘And we would turbocharge our transition to clean transport so never again are the British people left so exposed to unstable foreign oil.’
Chancellor Rishi Sunak has announced a £200 deferred energy payment and a £150 council tax rebate for some households to tackle the cost-of-living crisis.
A Government spokesman said: ‘The global price of crude oil has increased sharply over the past year, leading to increased petrol prices across the world, not just in the UK. But we will do everything we can to mitigate that and to help the people of this country.
‘The £12 billion in support that we’ve already announced to help with the cost of living includes a freeze on fuel duty for the 12th year in a row – the longest sustained freeze in British history.’
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