Rajan Wilcox
Fuel prices in the UK have been a significant concern for motorists, with prices reaching record highs in recent years. In March 2025, fuel prices climbed to their highest levels in six months, and the cost of filling up a tank remains elevated compared to pre-2019 levels. Various factors influence fuel prices in the UK, including inflation rates, oil prices, taxes, and market dynamics. As of March 2025, unleaded petrol averaged 137.39p per litre, while diesel averaged 144.14p per litre. These prices include VAT, and fuel duty, which is currently set at 52.95p per litre, contributes significantly to the overall cost. With prices varying across the UK, motorists are advised to use tools like fuel price locators to find the most affordable options in their areas.
| Characteristics | Values |
|---|---|
| Date | 10/07/2025 |
| Average unleaded petrol price per litre | 137.39p |
| Average diesel price per litre | 144.14p |
| Fuel duty | 52.95p |
| VAT | 20% |
| Highest fuel price region | Isle of Wight |
| Lowest fuel price region | Northern Ireland |
| Average unleaded supermarket price per litre | 142.2p |
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What You'll Learn
Fuel prices vary across the UK
Another factor impacting fuel prices is the role of retailers. Supermarkets, despite having a smaller number of forecourts, dominate fuel sales in the UK. Independents, on the other hand, operate around two-thirds of the country's filling stations but sell just over a third of the fuel. The presence of supermarkets can drive local prices down as they compete on price, while some independent retailers may also offer fuel at competitive rates. Additionally, the distance from fuel terminals can impact prices in rural locations, with greater distances potentially leading to higher prices.
Regional variations in fuel prices can be significant. In March 2024, an investigation found a 27p per litre difference in petrol prices between two filling stations located a short distance apart. Diesel prices also show similar variations. These disparities can be observed not just between regions but also within towns and between urban and rural areas.
To help motorists locate the most cost-effective fuel options, various tools are available, including fuel price comparison apps and websites. These platforms enable drivers to compare prices across different brands and fuel types, allowing them to make informed choices and potentially save money on their fuel expenses.
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Fuel tax and VAT
The price of fuel per litre in the UK is taxed in two ways: fuel duty and VAT. As of October 2024, the fuel duty is levied at a flat rate of 52.95 pence per litre for both petrol and diesel. This is a decrease from the previous rate of 57.95 pence per litre. The duty rate was cut in 2022 following the Russian invasion of Ukraine, which caused fuel prices to increase rapidly.
VAT is charged at 20% on both the underlying product price and the duty. This means that the total tax paid on fuel can vary depending on the pump price. For example, with fuel at 120 pence per litre, 65% of the cost is tax, but at 1 pound per litre, it rises to 75%.
The proportion of tax paid on fuel goes towards the Treasury, with fuel duty alone raising more than £26 billion per year. Motorists contribute over £40 billion annually to the Government's funds through fuel duty, VAT, vehicle tax, and 'showroom' tax.
Fuel prices in the UK can vary significantly, even over short distances. In March 2024, there was a 27 pence per litre difference in petrol prices between two filling stations located close to each other. The highest average prices for petrol and diesel were recorded in the summer of 2022, reaching 191.5 pence per litre for petrol and 199.09 pence per litre for diesel.
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The impact of inflation
Fuel prices in the UK have been seeing a constant rise, with average petrol and diesel prices hitting records during the summer of 2022. The highest average prices were 191.5p per litre of petrol and 199.09p per litre of diesel. However, some filling stations charged substantially higher than these averages. For instance, in March 2024, an investigation found a 27p per litre difference between the prices charged for petrol at two filling stations that were a short drive apart.
The Office for National Statistics (ONS) has regularly cited falling fuel prices as the main reason for a reduction in the headline inflation rate. However, higher oil and fuel prices can contribute to higher levels of inflation. The UK is among the countries experiencing a cost-of-living crisis influenced by the dynamics of the international oil and gas markets. Inflation soared in 2022 due to the increased demand for oil and gas after the Covid pandemic, and energy prices surged again when Russia invaded Ukraine.
Fuel prices are included in the Consumer Price Index (CPI) and any increase in fuel prices would translate to an increase in the overall CPI index. This is because households consume fuel for transport, lighting, and cooking. The response of inflation to fuel price increases is different in developing and advanced economies. While the purchasing power of all households declines as fuel prices increase, the impact is more persistent in developing countries.
The UK government charges fuel duty on every litre of fuel sold, which is included in the pump price. In recent years, the government has frozen fuel duty at the rate of 57.95p per litre, which was cut to 52.95p in 2022 due to the rapid increase in fuel prices caused by the Russia-Ukraine conflict. The duty rate is set to remain at 52.95p per litre from Spring 2025.
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The war in Ukraine
Fuel prices in the UK are made up of the wholesale price of the fuel, VAT at 20%, and fuel duty, which is currently set at 52.95 pence per litre. Fuel prices can vary depending on location and filling station, and prices tend to be led by supermarkets.
The Russian invasion of Ukraine has had a significant impact on fuel prices in the UK. Russia is the world's second-largest exporter of oil and supplies about a third of Europe's needs. The conflict caused fuel prices to increase rapidly, and the UK government cut fuel duty in 2022 to help offset these rising costs. In March 2022, UK petrol prices hit an average of 155 pence per litre, and some forecourts were charging substantially higher than the average. The conflict has also contributed to record wholesale gas prices, with the UK spending an estimated £60-70 billion on wholesale gas markets in the 12 months since the start of the war. This has added around £50-60 billion in additional costs to the UK economy.
The impact of the war on fuel prices has had a knock-on effect on inflation and the cost of everyday items. Analysts have warned that energy bills could reach as high as £3,000 per year due to surging oil and gas prices. There have been discussions of an embargo on Russian oil, which would be a major escalation and potentially have a significant impact on the global economy. However, some European countries are reluctant to implement such measures due to their dependence on Russian energy supplies.
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The cost of charging an electric car
The cost of fuel per litre in the UK has been a fluctuating figure. In March 2024, there was a 27p per litre difference in the price of petrol at two filling stations that were a short distance apart. The highest average price was recorded in the summer of 2022, with petrol at 191.5p per litre and diesel at 199.09p per litre. Fuel duty, VAT, and other factors contribute to the total retail price.
Now, let's discuss the cost of charging an electric car, which is generally much cheaper than fuelling a traditional vehicle. The cost of charging an electric vehicle (EV) depends on various factors, including the region, time of day, and electricity rates. The cheapest way to charge an electric car is typically at home, overnight, when electricity demand and rates are lowest.
To calculate the cost of charging an EV at home, you can divide the number of kilowatt-hours (kWh) used by the total cost on your electric bill. This will give you the price per kWh, which you can then multiply by the number of kWh your car's battery can store. The average cost of electricity in the US is about 17 cents per kWh, but rates vary across states and regions. For example, in Maine, the rate is about 28 cents per kWh, while in Tennessee, it's around 14 cents.
Public charging stations usually have higher fees than home charging, and costs can vary depending on the network and the time of day. DC fast-charging can be more expensive, but it may be necessary for road trips or when you need a quick charge. The pricing for public charging can be complicated, and there may be session fees for each charging connection.
Overall, the cost of charging an electric car depends on many variables, but it is generally more cost-effective than fuelling a traditional vehicle, especially when charging at home.
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Frequently asked questions
As of March 2025, unleaded petrol costs an average of 137.39p per litre, including VAT, and diesel costs an average of 144.14p per litre, including VAT.
As of September 2024, fuel duty is set at 52.95p per litre and VAT at 20%. The proportion of tax paid varies depending on the pump price. For instance, with fuel at 120p per litre, 65% of the cost is tax, but this rises to 75% at £1 per litre.
Northern Ireland has the lowest fuel costs in the UK, with average prices at 139.1p for petrol and 148.1p for diesel as of 2024.
