Rajan Wilcox
The price of fuel in England is a dynamic topic, with prices varying across retailers and regions. Fuel prices are influenced by wholesale fuel costs, which are affected by factors such as the global price of crude oil and exchange rates. Fuel duty, charged by the government, also plays a role in the final pump price. In recent years, fuel duty has been frozen at 57.95 pence per litre, with a reduction to 52.95 pence in 2022 due to rapid increases caused by the Russian invasion of Ukraine. As of January 6, 2025, the average price of unleaded petrol in the United Kingdom was 136.6 pence per litre, while diesel averaged 143.3 pence per litre. Understanding fuel prices and their fluctuations is essential for consumers, especially with the availability of tools like fuel cost calculators and fuel finder apps that help drivers manage their fuel expenses.
| Characteristics | Values |
|---|---|
| Date | 6 January 2025 |
| Average price of ultra-low sulfur unleaded petrol (gasoline) | 136.6 pence per litre |
| Average price of diesel | 143.3 pence per litre |
| Fuel duty | 52.95 pence per litre |
| Fuel cost | Varies based on fuel type, mileage, and mpg rate |
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What You'll Learn
Fuel duty is 52.95 pence per litre as of 2022
Fuel duty is an amount charged by the government on every litre of fuel sold in the UK, whether petrol or diesel. It is included in the pump price. In 2022, the fuel duty was cut to 52.95 pence per litre, down from 57.95 pence per litre. This reduction was in response to sharp increases in pump prices following Russia's invasion of Ukraine. The duty rate was cut by 5 pence per litre on 23 March 2022, and this reduction was extended multiple times, remaining in place until at least Spring 2025.
The fuel duty is a general form of taxation, with revenue raised not specifically allocated to roads or anything else related to motoring. While VAT is applied after fuel duty, the pump price of fuel reflects the pre-tax price, plus the fuel duty, VAT on the pre-tax price, and VAT on the fuel duty. This means that changes in the fuel duty can have a significant impact on the final pump price.
Fuel prices in the UK can vary, even over short distances, and are affected by wholesale fuel prices, which are influenced by the global price of crude oil and the exchange rate of the pound. A combination of high oil prices and a weak pound leads to the highest pump prices. Retailers also influence fuel prices, and there has been criticism of 'rocket and feather pricing', where prices are quickly increased but slowly decreased.
While fuel duty rates have been frozen or temporarily reduced in recent years, they have been significantly lower than earlier forecasts. This is due to policy decisions reflecting economic downturns, such as the coronavirus pandemic and the invasion of Ukraine, which reduced travel and economic activity. These events have led to weaker demand for fuel and, consequently, lower fuel duty receipts.
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Unleaded petrol is more affordable than diesel
The price of fuel in the UK is largely governed by wholesale fuel prices, which are themselves determined by the global price of crude oil. Fuel prices in the UK include duty and VAT, which can make up a significant portion of the total price. In recent years, the UK government has frozen fuel duty at 57.95 pence per litre, although this was reduced to 52.95 pence per litre in 2022 following the Russian invasion of Ukraine.
While I cannot find the exact price per gallon of unleaded fuel and diesel in England, I can provide some context on their relative affordability. Unleaded petrol is often more affordable than diesel, as diesel fuel is subject to higher taxes and production costs. The difference in price between the two fuels can vary over time, but generally, unleaded petrol remains the more economical option.
For example, in February 2016, the average price of a litre of unleaded petrol in the UK fell to 101.27 pence, while diesel was slightly higher at 100.19 pence per litre. More recently, in the summer of 2022, average prices for both fuels hit record highs, with petrol reaching 191.5 pence per litre and diesel peaking at 199.09 pence per litre.
It's worth noting that fuel prices can vary significantly across different regions and even within short distances. To ensure fair pricing, organisations like RAC in the UK monitor wholesale and pump prices daily, covering major supermarkets and other brands. They encourage retailers to pass on savings to drivers when wholesale prices dip. Additionally, drivers can utilise tools like the myRAC app to locate the most affordable fuel options within a given radius.
In summary, unleaded petrol tends to be more affordable than diesel in England and the UK as a whole. The price differential is influenced by factors such as global oil prices, taxes, and wholesale costs, which are closely monitored by organisations like RAC to ensure fairness and transparency in the market.
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Fuel prices vary across retailers and regions
Fuel prices in England vary across retailers and regions. Motor fuel pricing in the UK is not regulated by a monitoring body, so there may be notable price differences depending on the retailer and region. For instance, the brand on a forecourt does not necessarily indicate that the retailer operating the forecourt is the same as the brand. BP fuel, for example, is sold by a number of different retailers and not just BP itself.
Large supermarkets or hypermarkets account for more than 40% of motor fuel sales in the UK. They are popular because they offer lower average prices. The RAC's Fuel Watch initiative helps ensure retailers charge a fair price at all the UK’s forecourts. It monitors wholesale prices and pump prices daily, covering the UK's big four supermarkets (Asda, Costco, Tesco, Sainsbury's, and Morrisons), plus many other brands.
Petrol prices can vary significantly, even over short distances. The price you pay for petrol and diesel at the pumps is governed by wholesale fuel prices, which are affected by the global price of crude oil and the dollar-to-sterling exchange rate. A combination of high oil prices and a weak pound leads to the highest pump prices.
The UK government charges fuel duty on every litre of fuel sold, and this is included in the pump price. In recent years, the fuel duty rate has been frozen at 57.95 pence per litre. It was cut to 52.95 pence in 2022 following the Russian invasion of Ukraine, which caused fuel prices to increase rapidly.
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VAT is static, but oil prices and exchange rates fluctuate
The price of fuel in the UK is influenced by various factors, including wholesale fuel prices, which are dictated by the global price of crude oil and the exchange rate between the dollar and sterling. While some of these factors remain relatively stable, such as Value-Added Tax (VAT), which is currently set at a standard rate of 20% for fuel, others like oil prices and exchange rates can be highly volatile. This volatility leads to the fluctuations in pump prices experienced by consumers.
VAT is a general form of taxation applied to goods and services, including fuel, in the UK. The standard rate of 20% applies to fuel purchases, although there are reduced rates for certain types of fuel, such as domestic heating fuel, which is taxed at 5%. VAT on fuel is typically included in the pump price, and businesses and individuals can reclaim this VAT on fuel expenses under specific conditions.
Oil prices, on the other hand, are subject to constant change due to various economic factors and global events. For instance, the Russian invasion of Ukraine caused rapid increases in fuel prices worldwide. These price shocks have a direct impact on inflation, with the UK experiencing a cost-of-living crisis influenced by the dynamics of international oil and gas markets. The response of inflation to oil price shocks is asymmetric, meaning the impact on inflation is complex and unpredictable.
Exchange rates also play a crucial role in determining fuel prices in the UK. Since oil is traded internationally in US dollars, the strength of the pound sterling against the dollar affects the price paid by UK fuel retailers and, ultimately, consumers. A weak pound combined with high oil prices can result in the highest pump prices, while a strong pound can help mitigate the impact of rising oil prices.
In conclusion, while VAT on fuel remains static at 20% in the UK, oil prices and exchange rates are dynamic and unpredictable. The fluctuations in these factors directly influence the price of fuel, leading to the variability in pump prices experienced by UK consumers. Understanding these dynamics is essential for both individuals and businesses to manage their fuel expenses effectively and make informed strategic decisions.
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Large supermarkets offer lower fuel prices
The price of fuel in England is affected by various factors, including the global price of crude oil, the distance between the petrol station and the refinery, and the strength of the pound against the dollar. Fuel duty, currently set at 52.95 pence per litre, is another significant component of pump prices.
Large supermarkets often offer lower fuel prices than branded fuel retailers. Supermarket fuel prices are typically between 3p and 5p cheaper per litre than those of branded fuel. In areas with multiple supermarkets or high competition, these prices can be even lower, sometimes up to 8p-10p less per litre. Supermarkets engage in price wars, aggressively cutting fuel prices to attract customers and encourage brand loyalty.
The lower prices offered by supermarkets can be attributed to their large economies of scale, allowing them to pass on savings to customers. Additionally, supermarkets primarily compete with each other rather than big fuel retailers, further driving down prices. While some consumers may be concerned about fuel quality, supermarket fuel adheres to the same minimum safety and quality standards as premium sellers, ensuring it won't damage your engine.
To enhance the convenience of their customers, supermarkets often introduce fuel-rewards programs and promotions. These programs provide customers with benefits such as gas vouchers, discounts, and rewards, making it more economical to purchase fuel from supermarkets than from other retailers.
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Frequently asked questions
Fuel prices in England are measured per litre, not per gallon. As of January 6, 2025, ultra-low sulfur unleaded petrol (gasoline) in the UK averaged 136.6 pence per litre, while diesel averaged 143.3 pence per litre.
England uses the metric system, which measures volume in litres, whereas the US uses the imperial system, which uses gallons.
Fuel prices in England are influenced by wholesale fuel prices, which are affected by the global price of crude oil and the dollar-to-sterling exchange rate. Fuel duty, charged by the government per litre of fuel sold, also impacts prices. Additionally, prices can vary between retailers and regions, with large supermarkets often offering lower prices.
You can use fuel cost calculators and fuel finder apps, such as the myRAC app, to search for the most affordable fuel prices within a specified distance range.
