UK petrol prices have hit their highest level on record in a blow to hard-hit households and small businesses, and could rise further in the coming weeks as the global energy crisis drives oil markets to a three-year high.
The average daily price for a litre reached 142.94p on Sunday, in what was described as a “truly dark day for drivers”, surpassing the all-time record 142.48p reached on 16 April 2012, according to data from the RAC/Experian.
The new high, which was predicted by analysts late last week, is 28p a litre more than a year ago, when petrol cost about 114.5p. This will add more than £15 to the cost of filling up a family car with a 55-litre tank, to about £78.61 from £63 last October, piling further financial pressure on households this winter.
Petrol prices have climbed steadily in line with global oil market prices, which have more than doubled from about $40 (£29) a barrel a year ago to about $85 in recent weeks because of a sudden rise in post-pandemic energy demand.
The price of Brent crude reached $86.50 a barrel on Monday afternoon – the highest since October 2018 – an increase that is likely to result in further price increases at the pumps.
Simon Williams, a spokesperson for the RAC, said it was “a truly a dark day for drivers” that would “hurt many household budgets and no doubt have knock-on implications for the wider economy”.
He added:“The big question now is: where will it stop and what price will petrol hit? If oil gets to $100 a barrel, we could very easily see the average price climb to 150p a litre.”
Small businesses are also expected to bear the brunt of the fuel price highs, which follow one of the steepest ever hikes for energy bills and the rising costs caused by severe disruptions across global supply chains.
The RAC has called on the chancellor, Rishi Sunak, who will deliver the government’s autumn budget this week, to temporarily reduce VAT for the biggest retailers to bring the amount they make on every litre of petrol back down to its level before the pandemic.
“Even though many people aren’t driving as much as they have in the past due to the pandemic, drivers tell us they are just as reliant on their cars, and many simply don’t have a choice but to drive. Those on lower incomes who have to drive to work will seriously struggle to find the extra money for the petrol they so badly need,” Williams said.
Amy Baker, the owner of Halo Beauty and Holistic Therapy, a mobile and salon-based beauty business, said the record petrol price high was “yet another hammer blow” for small businesses following the toll of the Covid-19 pandemic.
“I am yet again hit with having to absorb these extra costs and reduce my chances of getting back on track. I have now got no choice but to reduce my mobile side of the business to reduce costs,” Baker said.
Jez Lamb, the founder of beer tasting company Beers@No.42, said his business would “undoubtedly” be affected by couriers increasing their prices as a result of the petrol price hike. “But do we pass this on to our own customers who are already being hit with prices rising elsewhere? It’s yet another headache and challenge to overcome,” Lamb said.
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The US bank Goldman Sachs predicted last month that global oil prices could continue to climb to $90 a barrel by the end of the year, while its rival Bank of America said a cold winter could lead to the price of Brent hitting $100 a barrel within months.
Goldman expects global oil demand to reach pre-pandemic levels of about 100m barrels a day “shortly”, as Asia’s appetite for crude continues to rebound after the Delta Covid-19 wave. The bank also expects major energy consumers to use an extra 1m barrels of oil a day to replace gas, which has reached all-time price highs in recent months.
