Over the past year, UK drivers have suffered on average a 5.4ppl increase in pump prices as a consequence of the post-referendum weakening of the pound against the dollar, the latest AA Fuel Price Report has revealed.
With a typical fuel tank holding 55 litres of fuel, the cost of filling it has since the referendum on 23 June 2016 has averaged £3 higher than if Sterling had retained its previous value.
For a family with two petrol cars, the lower exchange rate added £142.56 to annual refuelling costs. For ‘white van man’, the penalty for filling an 80-litre tank with diesel has averaged £4.25 over the past 12 months.
Because petrol and diesel are traded in dollars on the commodity market, a stronger pound makes fuel cheaper at the pump and a weaker pound makes it more expensive.
In the year leading up to the EU referendum, the value of the pound against the dollar averaged $1.486. In the 12 months after, it averaged $1.269 or 14.6% less.
Edmund King, the AA’s president, said: “The impact of Sterling’s loss in value would have been far, far worse had the price of oil recovered and the commodity price of fuel with it. If the market cost of petrol had returned to the $730 a tonne of June 2015, drivers in October 2016 could have faced paying an extra 12ppl or £6.60 a tank.”
The Fuel Price Report said two supermarket pump price battles in June helped to cut nearly 2ppl off the average cost of petrol and diesel on UK forecourts. Petrol on Monday averaged 114.66ppl, compared with 116.36ppl a month ago. Diesel early this week averaged 115.42ppl, compared with 117.34ppl in mid June.
Strong competition between the Big Four supermarkets has enabled them to recover the 4ppl gap between what they charge on average for petrol and the average price among other retailers (111.78ppl versus 115.86ppl). Diesel at supermarkets averages 4.3ppl cheaper than at non-supermarket fuel stations (112.30ppl versus 116.60ppl).
“In the first three months of this year, supermarkets saw their petrol sales drop by 6.2% compared to the same time the previous year. Against a general reduction of 1.8% among all retailers, it spurred a series of supermarket price wars in March, May and twice in June,” said Luke Bosdet, the AA’s fuel prices spokesman.
“These have created deep and enduring price cuts among all four of the supermarkets and, although the price of oil has risen over the past fortnight, drivers can still find petrol at 110.9ppl a litre in places.”