Petrol prices FALL to a three-year low – could it mean a fuel duty hike in the Budget is imminent?

The typical worth of unleaded fell to a three-year low of 139.5p a litre yesterday, in line with AA knowledge.

Whereas this can be welcomed by motorists, the worth is being bouyed by the 5p gas responsibility reduce made by the earlier authorities. 

The motoring organisation is asking for the brand new authorities to proceed gas responsibility aid forward of the Funds in October.

Earlier than petrol dropped to 139.5p a litre yesterday, the earlier lowest quantity was 139.7p in January 2024.

The present common worth was final seen in October 2021, so motorists can breathe the most important sigh of aid whereas filling up in practically three years.

Diesel equally fell yesterday to 144.2p a litre.

Earlier than that the bottom diesel worth had been 144.3p a litre in October 2021, throughout a second when covid disruption had hit however earlier than Ukraine had been invaded.

Nevertheless, the truth is that with out the 5p gas responsibility reduce (6p with VAT), these three-year lows would have been delayed 10 to 14 days, the AA says.

Gas responsibility was reduce in March 2022, the affect of which should not be underestimated.

The typical worth of petrol fell by a penny over the weekend into Monday and additional 0.4p on Tuesday.

Had the gas responsibility reduce not been in place, even when pump worth maintained Tuesday’s charge of fall, it could nonetheless have taken greater than 10 days for pump costs to drop to the place they’re now.

With out the responsibility reduce pump costs now would have been 145.5p for petrol and 150.2p for diesel.

‘Pure and easy, the one purpose why pump costs are practically at a three-year low this week is due to the 5p gas responsibility reduce. 

‘Eradicating it threatens to ship thousands and thousands of low-income drivers again into the period of ‘perma-high’ highway gas costs,’ says Edmund King, AA president.

‘Eliminating the gas responsibility reduce unleashes a £3.30 a tank (normal 55 litres) shock on the non-public and household budgets of the 28 per cent of drivers who spend a set quantity after they go to a gas station.’

With out the 5p gas responsibility reduce (6p with VAT), these three-year lows would have been delayed 10 to 14 days, the AA says

This follows warnings from the AA that, had the gas responsibility reduce not been carried out in March 2022, UK motorists would have endured common petrol costs at greater than 150p a litre from 21 February to eight August.

Earlier than Covid, the worst costs UK motorists suffered was 142.48p a litre in April 2012.

That is Cash reported {that a} trifactor of gas responsibility hikes, commodity worth surges and swollen retailer margins might trigger actual monetary hardship.

‘Eliminating the gas responsibility reduce unleashes a £3.30 a tank (normal 55 litres) shock on the non-public and household budgets of the 28 per cent of drivers who spend a set quantity after they go to a gas station’, says AA President Edmund King

How would a gas responsibility hike hit drivers ?

With the Labour Authorities suggesting they’ve a ‘£22billion black gap’ in public funds left to fill by the parting Tory regime, a hike in highway gas taxation seems imminent.

This could be the primary hike since 2011. 

Whereas many motoring teams anticipate a cancellation of the 5p gas responsibility to recoup round £2.4billion a 12 months for Treasury coffers, the upcoming unhealthy information would not cease there for motorists: some specialists are predicting the Chancellor will go a lot additional by rising the responsibility by 10p a litre.

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Howard Cox, a Reform UK politician in addition to founding father of the FairFuelUK marketing campaign group, mentioned final week: ‘I’ve credible intelligence that the Treasury has nearly settled… on rising gas responsibility by 10p a litre’. 

This might probably see the levy on each litre of petrol and diesel elevated to 62.95p. 

‘I predict the web final result from the October Funds is that the UK’s drivers are set to be fleeced on a scale not seen since 1997 to 2010 when Labour elevated gas responsibility by a staggering 46 per cent,’ Cox went on.

Drivers are being warned to arrange for a gas responsibility hike and better prices on the pump as Chancellor Rachel Reeves (pictured) strains up tax rises in a ‘painful’ Funds

The AA anaylsed the affect of scrapping the 5p gas responsibility reduce on dwelling wage employees who drive a considerable mileage to work or in the middle of it.

These are worker who works 40 hours per week at £11.44 an hour, at present taking house £20,653.94 yearly. 

In April 2022, the identical dwelling wage employee, on £9.50 a hour, took house £17,748.60 a 12 months – a distinction of £2,905.34.

If the 5p gas responsibility reduce was scrapped it could lead to a 6p-a-litre improve to the petrol pump worth and would add £3.30 to the price of filling the standard 55-litre automotive gas tank. 

For a employee who fills up as soon as per week, the annual improve in gas prices can be £171.60. 

Oil costs fell from above $80 a barrel in mid August to $73 this week, which is very constructive as crude oil worth modifications are felt arduous on the pumps: each $2-a-barrel rise in oil inflicting a 1p a litre improve in petrol costs

Oil prices fall – how do oil costs have an effect on petrol pump costs?

The opposite purpose gas costs have dropped as of yesterday is due to crude oil costs: oil fell from above $80 a barrel in mid August to $73 this week.

The ensuing crash in wholesale gas prices has helped this week’s cheaper pump prices.

Oil worth modifications are felt arduous on the pumps.

The business normal is for a 1p a litre cost on the pump for each $2-a-barrel change within the worth of oil.

Because of this a $20 improve will result in a £5.50 soar in the price of a filling a typical 55-litre gas tank.