Ameer Randolph
The price of unleaded fuel is a concern for many people, especially with the current high cost of living. The price of fuel can vary dramatically from region to region, with London recording the highest price for unleaded fuel in the UK at 146.7 p/litre, while Northern Ireland has the lowest at 139.1 p/litre. In the US, prices vary from state to state, with Vermont and New Jersey among the lowest at $3.107 and $3.090 respectively, and Washington among the highest at $5.143. The price of unleaded fuel is influenced by various factors, including wholesale prices, retailer margins, and taxes.
| Characteristics | Values |
|---|---|
| Current unleaded fuel cost in the UK | 142.2 p/litre |
| Highest unleaded fuel cost in the UK | 146.7 p/litre in London |
| Lowest unleaded fuel cost in the UK | 139.1 p/litre in Northern Ireland |
| Historical high in the UK | 191.5 p/litre in July 2022 |
| Historical low in the UK | 101.27 p/litre in February 2016 |
| Current unleaded fuel cost in the US | $3.167 |
| US historical high | $4.534 |
| US historical low | $2.714 |
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What You'll Learn
How much does unleaded fuel cost in the UK?
The price of unleaded fuel in the UK has been highly volatile in recent years, with prices fluctuating in response to changes in wholesale costs, oil prices, and global conflicts. As of March 2025, the average cost of unleaded petrol in the UK was 137.39 pence per litre, including VAT. This price includes a fuel duty of 52.95 pence per litre and a standard VAT rate of 20%across different regions of the UK. For example, Northern Ireland is typically the cheapest place to buy fuel, with average petrol prices of 139.1 pence per litre in 2024. In contrast, the Isle of Wight is the most expensive region, with petrol prices peaking at 150.6 pence per litre.
The price of unleaded fuel is also influenced by the competition among the 'big four' supermarkets: Asda, Tesco, Morrisons, and Sainsbury's. When one of these supermarkets lowers its fuel prices, the others often follow suit. Additionally, the UK government's decisions on fuel duty and VAT rates have a significant impact on the final price that consumers pay at the pump.
It's worth noting that unleaded fuel prices in the UK reached record highs during the summer of 2022, with the average price of petrol peaking at 191.5 pence per litre in July 2022. However, prices have generally been on a downward trend since then, providing some relief to motorists.
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How do fuel prices vary across regions?
Fuel prices vary significantly across different regions, and even within the same city. Several factors influence these price discrepancies, including local market conditions, competition, supply and demand dynamics, and taxes.
In the United States, the price of crude oil, which is the largest component of retail gasoline prices, is cheaper in states that produce or refine oil, such as Texas, North Dakota, Oklahoma, and Louisiana. Conversely, regions like the Northeast and West Coast, which rely more on imported oil, tend to experience steeper fuel prices and taxes. Additionally, states tax gasoline at different rates, with California having the highest rate, followed by Pennsylvania, and Alaska having the lowest rate.
Within the United Kingdom, fuel prices fluctuate across regions. For instance, in November 2015, petrol stations in East Anglia charged 117.1 pence per litre for unleaded petrol, while the South West averaged 116.1 pence per litre. Competition plays a significant role in price variations, with lower fuel prices typically found in cities with a higher number of petrol stations, as retailers compete for customers. Conversely, rural areas with fewer petrol stations often have higher prices due to reduced competition and higher business costs for independent retailers.
Seasonality also impacts fuel prices, with gasoline demand and prices typically increasing during the summer travel months of July and August. This increase in demand can be attributed to various factors, including refinery maintenance, the switch to summer blend gas, and higher consumer demand during the summer holiday season.
Furthermore, the cost of doing business for gasoline retailers can vary depending on their location, affecting the prices they charge. Factors such as wages, rent, and local fees can influence the operating costs of gasoline retailers, leading to price differences even between neighbouring retail stations.
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How often do fuel prices change?
The frequency of fuel price changes depends on a variety of factors, including supply and demand, crude oil prices, and seasonal variations.
Fuel prices can change rapidly in response to disruptions in crude oil supplies, refinery operations, or pipeline deliveries. For example, if there is an unexpected decline in supply due to refinery or pipeline problems, gasoline inventories may drop quickly, leading to more frequent price changes.
Seasonal changes in demand and specifications also play a role in fuel price fluctuations. Gasoline prices tend to be lower in the winter months and gradually rise in the spring, peaking in late summer when driving activity increases. Environmental regulations also require summer gasoline to be less prone to evaporation in warm weather, leading to refiners using more expensive components, which can result in higher prices.
Regional differences in fuel prices can also occur due to variations in gasoline formulations and local supply and demand imbalances.
While daily or weekly fluctuations in fuel prices may not be noticeable, fuel prices can change multiple times within a month, reflecting the dynamic nature of the fuel market and the various factors influencing it.
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How much tax is included in the price of fuel?
The tax on fuel varies across different countries. In the United States, the federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. State and local taxes and fees further add 34.24 cents to gasoline and 35.89 cents to diesel, bringing the total US volume-weighted average fuel tax to 52.64 cents per gallon for gas and 60.29 cents per gallon for diesel. The first federal gasoline tax in the country was created in 1932, taxing 1 cent per gallon. Since 1993, the tax has remained unchanged, despite calls from some policy advisors for an increase to fund and sustain the country's transportation infrastructure.
In the United Kingdom, as of March 23, 2022, the duty rate for road fuels such as unleaded petrol, diesel, biodiesel, and bioethanol is £0.5295 per litre. On top of this, Value Added Tax (VAT) at 20% is also charged on the price of the fuel and the duty. An additional vehicle excise duty, depending on a vehicle's theoretical CO2 production per kilometre, is also levied.
In Sweden, the fuel tax includes a carbon tax and an energy tax, totalling 8.425 kr per litre of petrol and 7.425 kr per litre of diesel as of July 1, 2018. In Australia, the fuel tax is A$0.412 per litre for petrol and ultra-low sulphur diesel, with additional GST (goods and services tax) on top of the fuel tax.
In some places, the tax on fuel can make up a significant portion of the total price. For example, in Delhi, India, as of February 18, 2021, the total tax on petrol amounted to ₹52.30 (62¢ US) per litre, which is around 58% of the total price. Similarly, in Israel, the tax on fuel is 1.35 USD per litre, including direct fuel tax and VAT, totalling 78% of the total pump price.
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How does fuel price impact inflation?
The price of fuel has a direct impact on inflation. When fuel prices increase, inflation tends to follow suit. This relationship is observed in both advanced and developing economies, although the response is more pronounced and longer-lasting in the latter.
In advanced economies, the impact of fuel price increases on inflation tends to be more immediate, with a sharp rise in inflation following the fuel price shock. However, the purchasing power of households recovers within about six months. This recovery is attributed to various factors, including the relatively stronger position of advanced economies to absorb and distribute the impact. Additionally, the service sector's prominence in advanced economies plays a role, as it uses energy less intensively than manufacturing, reducing the direct link between fuel prices and the cost of goods and services.
In contrast, developing economies experience a more gradual and persistent rise in inflation following fuel price increases. This persistence results in a stronger overall impact on consumer price levels in these economies. The reasons for this prolonged impact include the relatively weaker ability of developing economies to mitigate the effects of fuel price shocks and the higher proportion of income that households in these economies must devote to fuel.
The impact of fuel price increases on inflation is not limited to the overall consumer price index (CPI). It also varies across different goods and services. Transport CPI, for example, is highly sensitive to fuel prices in both advanced and developing economies. However, the impact on other CPI components differs between the two types of economies. Developing economies exhibit a more broad-based pass-through, with a greater number of CPI components being significantly affected by fuel price increases.
While the exact price of unleaded fuel is difficult to pinpoint due to its constant fluctuation and variation based on location, it is clear that fuel prices have a direct impact on inflation. As fuel prices rise, inflation tends to follow, affecting the purchasing power of households and influencing the prices of goods and services, particularly in the transport sector.
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Frequently asked questions
As of 2023, the average price of unleaded fuel in the UK was around 142.2 p/litre. However, prices vary across different regions, with London recording the highest price at 146.7 p/litre and Northern Ireland recording the lowest at 139.1 p/litre.
The cost of unleaded fuel is influenced by various factors, including wholesale prices, taxes, and regional differences. When wholesale prices change, retailers may choose to pass on the savings or increases to customers at their discretion. Additionally, taxes can account for a significant portion of the fuel cost, ranging from 65% to 75% depending on the price per litre.
Unleaded fuel prices can change frequently, and it depends on how often retailers buy their fuel and the fluctuations in wholesale prices. Prices may also vary between different retailers and regions, even in towns that are only a few miles apart.
Yes, there are fuel cost calculators available online, such as the one provided by Fleet News. These tools allow you to input your vehicle's information, including fuel type, mileage, and mpg rate, to estimate the cost of unleaded fuel for your specific vehicle.
