The PRA’s warning last week that petrol prices were set to surge up to 140 pence per litre (ppl), with diesel going up by the same amount, has been supported by the latest AA Fuel Price Report.
It said a $100-a-tonne increase in the cost of wholesale petrol across north-west Europe, combined with a weaker pound, heralds a potential 5p increase in pump petrol costs.
And it added that with average UK petrol prices up from 134.61p a litre in mid June to 135.78p now, more than a penny has already fed through to the pump.
However, it claimed the average hid a wide range of pricing, with some petrol stations having already passed on the full increase in costs, while two supermarkets were cheaper on average than a month ago.
Diesel prices, which averaged 139.16p a month ago, have also risen more than a penny to 140.24p, but wholesale prices in north-west Europe have risen less than petrol, with an increase of around $40 in the past fortnight.
The AA said that the fall in the value of sterling versus the dollar had added about 1.5ppl to the wholesale cost of petrol, but it said much of the rest of the increase was due to the action of oil and fuel market speculators.
AA president Edmund King said: “Last week’s OPEC oil market report painted a picture of improved summer petrol consumption in the US and Europe, but stocks remain significantly larger than last year – 9.3% up in north-west Europe. The report refers to ‘slack demand in Europe and a slow start to the US summer driving.
“OPEC summarises the gasoline market in the Atlantic Basin as ‘losing ground due to limited demand on the Atlantic Coast which has not so far provided the strong boost that was seasonally expected’. And therein lies the rub – market speculation versus consumer reality.
“US regulator data shows that betting on rising oil prices is at its highest since May 2011 – and we all know how that ended, oil crashing from $125 to $108 a barrel in June. Meantime, UK petrol consumption fell more than 5% as cash-strapped drivers cut back and RPI inflation was running above 5%.
“After the price of petrol stabilised at around 134.6p a litre through much of this June, and weeks were filled with beautiful weather and sporting excellence, it was perhaps inevitable that oil and fuel market speculators would cast a black cloud over what was promising to be a glorious summer.”
To see last week’s PRA price warning click here