Petrol and diesel prices

Oil prices jumped on 24 February, when Russia invaded Ukraine, and continued to rise through early March. This led to very large increases in road fuel prices to new record levels in early and mid-March. 

The rates of duty on petrol and diesel were cut by five pence per litre on 23 March 2022. This initially led to a fall in the price of both fuels, but by less than five pence per litre. Since then prices have increased again with particularly large increases in late May and early June. Both petrol and diesel prices have set and broken many new records in this period.

The high international oil prices are magnified in the UK due to the relative weakness of Sterling. Crude oil prices in Sterling reached their highest ever levels in 2022. On top of this there have been record refinery margins, initially for diesel and latterly for petrol, due to a fall in refinery output/capacity and the impact of the war in Ukraine. This explains the rapid increase in road fuel prices in May and June at a time when oil prices have increased more slowly.

This paper looks at trends in the price of petrol and diesel at the pump and before tax, possible reasons for the gap in prices between the two fuels and compares prices and taxes in different countries.

Trends in the pump and pre-tax price of road fuel and other petroleum products are given in BEIS’s Collection of road fuel and other petroleum product price statistics publication. The AA’s Fuel Price Reports have daily national average prices. The RAC’s Fuel Price Watch includes up to date prices, longer term trends and a breakdown of the different price components. www.petrolprices.com gives daily average prices and local figures. The Hydrocarbon Oils Bulletin from HMRC includes details of changes in duty rates and revenues. The European Commission’s Oil Bulletin gives a weekly comparison of pump and pre-tax prices of fuels across the EU. The International Energy Agency’s Monthly Oil Prices shows trends in fuel prices for the largest OECD economies. Their Oil Market Report gives background to changes in oil and product prices. The Library briefing Oil prices summarises data on price trends.

An appendix to this note looks at the real cost of petrol since 1920 and the real value of duty and VAT per litre. Prices in January 2012 were just above their earlier post second world war high in real terms -set during the Suez crisis- but still below the real prices charged in 1920 when petrol pumps were first introduced. The total tax on a litre of petrol peaked in early 2010; the latest figure is around 32% below this peak.