Oil prices have fallen to an 18-month low but this not being reflected in prices at the pump because sterling has lost value against the dollar, according to the AA.
In its Fuel Price Report for September the AA says average pump prices reached a low on August 31 of 128.72ppl for unleaded petrol and 133.02ppl for diesel, but by mid September prices had eased upwards again to reach 129.23ppl for unleaded petrol and 133.44ppl for diesel.
Over the past fortnight, wholesale petrol has averaged around $950 a tonne. In mid-August, the pound was worth $1.67, which would have made the current wholesale petrol cost 42.9ppl. However, with the pound this week valued at $1.62, wholesale petrol is 44.3ppl, and taking into account VAT, the monthly difference at the pump is 1.7ppl.
Had the pound held its mid-August value, the average cost of petrol would have now be around 127.5ppl – the lowest since 5 January 2011, the day after the VAT increase to 20%.
AA president Edmund King commented: “There is a lot of anger and frustration being vented by AA members and other drivers that, although the oil price has fallen significantly, pump prices have started to go up again. It is a clear illustration of how the value of the pound is critical when buying commodities such as oil and wholesale fuel that are traded in dollars.
“It is also a double-edged sword. Earlier this year, the impact of oil prices rising to $115 a barrel was offset by a strong pound trading at nearly 10 cents higher on the dollar. However, although the dollar has been strengthened by speculation of an interest rate rise in the US, another part of the equation has been the weakening of the pound on speculation of the outcome of the Scottish referendum.
“The impact of the referendum result may be felt by motorists on both sides of the border sooner than they think - perhaps over the following fortnight, depending on whether the effect on the pound is sustained.”
On a regional basis, East Anglia has taken over from Northern Ireland as the most expensive area in the UK for petrol averaging 129.7ppl. London joins Yorkshire and Humberside as the cheapest for petrol, both averaging 128.9ppl.
East Anglia is also has the highest average price for diesel, at 134.0ppl, while the North West and Yorkshire and Humberside enjoy the cheapest, both averaging 133.0ppl.