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The price of fuel is a highly variable issue, with many factors influencing the cost at the pump. For example, the price of oil, the strength of the pound against the dollar, and taxation all play a part in determining the price of fuel. In London, the average price of petrol is around 145-148 p/litre, with the maximum price recorded being 1.37 p/litre. These prices are higher than those found in other parts of the UK, such as Northern Ireland, which has the lowest fuel prices in the country.
| Characteristics | Values |
|---|---|
| Average petrol price in London | 145.6p/litre-148.2p/litre |
| Average gasoline price in London | 1.35 per litre |
| Minimum gasoline price in London | 1.33 per litre |
| Maximum gasoline price in London | 1.37 per litre |
| Highest unleaded price in London | 146.7p/litre |
| Highest diesel price in London | 154.8p/litre |
| Factors affecting fuel price | Tax, global price of crude oil, dollar to sterling exchange rate |
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What You'll Learn
Average petrol price in London
The average price of petrol in London is around 145-148 p/litre, though prices vary across the city. London has recorded the highest price for unleaded petrol in the UK, at 146.7 p/litre.
Petrol prices in the UK are governed by wholesale fuel prices, which are themselves influenced by several factors, including the global price of crude oil, the strength of Sterling against the US dollar, and retailers' margins. The price of a litre of fuel is also significantly impacted by tax—fuel duty and VAT—which can make up a large proportion of the total price.
When the price of oil is falling, pump prices may not seem to be reducing proportionally due to the fixed cost of tax. Additionally, a combination of high oil prices and a weak pound tends to result in the highest pump prices.
The RAC's Fuel Watch initiative monitors petrol and diesel prices to ensure retailers are charging a fair price across the UK's forecourts. The wholesale prices that retailers pay and pump prices are tracked daily, covering major supermarkets and other brands.
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VAT and fuel duty impact
The average price of petrol in London is 145.6p/litre. This price includes fuel duty and VAT.
Fuel duty and VAT are the two forms of tax applied to fuel in the UK. Fuel duty is levied per unit of fuel purchased and is included in the price paid for petrol, diesel, and other fuels used in vehicles or for heating. The rate of fuel duty depends on the type of fuel and how it is used. For instance, the headline rate for standard petrol and diesel is 52.95 pence per litre, while the rate for marked gas oil is 10.18 pence per litre. This lower rate mostly represents off-road diesel used for agriculture, rail, non-commercial heating, and electricity.
VAT is then added on top of the fuel duty. The standard rate of VAT is 20% on most fuel, while a reduced rate of 5% is applied to domestic heating fuel. For example, the pump price of a litre of petrol includes the pre-tax price, plus 52.95p for fuel duty, plus 20% VAT on the pre-tax price, plus an additional 10.59p for VAT at 20% on the fuel duty.
The UK government's revenue from fuel duty is expected to reach £24.4 billion in 2025-26, which represents 2.0% of all receipts. However, the government's receipts from fuel duty have been impacted by changes in duty rates and reduced demand for travel during the coronavirus pandemic. For example, the duty rate was cut by 5 pence per litre in 2022-23, resulting in a 3.2% decrease in receipts in 2022-23.
Overall, the combination of fuel duty and VAT significantly affects the price of fuel in London and the UK, and these taxes represent a substantial source of revenue for the government.
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Wholesale prices and pump prices
The price of fuel in London is determined by a combination of factors, including wholesale prices, pump prices, and taxes.
Wholesale prices refer to the prices that retailers pay for the fuel. These prices are influenced by the global price of crude oil and the strength of the pound sterling against the US dollar, as oil is traded in dollars. When wholesale prices change, it can affect the pump prices that drivers see at the forecourt. For example, when wholesale prices decrease, organisations like Fuel Watch call on retailers to pass on the savings to drivers, resulting in lower pump prices.
Pump prices refer to the prices that drivers pay for fuel at the petrol station. In London, the average petrol price varies across the city, with Inner London having a slightly higher average price than Outer London. As of March 2024, the average petrol price in London was around 145.6p/litre to 148.2p/litre. The price of unleaded petrol in London specifically was recorded at 146.7 p/litre, higher than in other parts of the UK like Northern Ireland.
The pump prices also include various taxes, such as fuel duty and VAT. These taxes make up a significant portion of the total price per litre. When oil prices are falling, it may create the perception that pump prices are not decreasing proportionally due to the fixed cost of taxes. Additionally, a combination of high oil prices and a weak pound can lead to the highest pump prices.
Overall, the wholesale and pump prices of fuel in London are influenced by global oil prices, exchange rates, and taxes. These factors collectively determine the final price that drivers pay at the pump.
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Petrol prices in Inner London
The average petrol price in London is around 145.6p per litre, though prices vary across the city. In Inner London, the average price is slightly higher, at 148.2p per litre or 148.5p per litre, according to different sources.
There are several factors that influence the price of petrol in the UK. One of the main factors is tax, which can make up a significant portion of the price per litre. Fuel duty and VAT are included in the price, and when oil prices fall, the proportion of tax in the total price increases. The strength of the pound against the US dollar also affects prices, as oil is traded in dollars. When the pound is weak, pump prices tend to be higher.
To find the best value petrol in Inner London, there are a few tools available online. Petrol Map and Vehicle GoGo allow users to find the latest prices at any petrol station in the UK and offer weekly price alerts. The myRAC app also helps users find the cheapest fuel in their area, allowing searches within a 2, 5, or 10-mile radius.
In Inner London, there are numerous petrol stations from various brands, including Shell, Texaco, Tesco, BP, Esso, and more. The price of petrol can vary between these stations, so it is worth shopping around or using one of the price comparison tools mentioned above to find the best deal.
While the average price in Inner London is slightly higher than the London average, it is still below the UK-wide average. As of May 2023, the UK average for a litre of unleaded petrol is 161.9p. Londoners can thus expect to pay a few pence less per litre than the national average.
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Unleaded and diesel prices
The price of fuel in London is affected by several factors, including taxes and the wholesale price that retailers pay, which is influenced by the global price of crude oil. Fuel duty and VAT can make up a significant portion of the price per litre, and the strength of Sterling compared to the US dollar also plays a role, as oil is traded in dollars. Generally, higher oil prices lead to higher prices at the pump.
According to Petrol Map, the average petrol price in London is around 145.6p to 148.2p per litre. However, prices can vary across different petrol stations in the city.
Unleaded prices in London have been rising. As of March 2024, the unleaded price in London was recorded at 146.7 p/litre, up from 145.3 p/litre the previous month. In comparison, the lowest unleaded price was recorded in Northern Ireland at 139.1 p/litre.
Diesel prices in London have also been increasing. In March 2024, the diesel price in London was 154.8 p/litre, up from 153.9 p/litre the previous month. Similar to unleaded, the lowest diesel price was found in Northern Ireland at 148.1 p/litre.
To find the most up-to-date and accurate prices for unleaded and diesel fuel in London, residents can use tools such as Petrol Map, which provides weekly price alerts and helps locate the best value petrol stations in the area.
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Frequently asked questions
The average price of petrol in London is between 145.6p/litre and 148.2p/litre. The price varies depending on the petrol station.
Fuel prices are governed by wholesale fuel prices, which are affected by the global price of crude oil. Other factors include the strength of the pound sterling against the US dollar and the retailer.
You can use websites such as Petrol Map and RAC Drive to find the latest fuel prices in London. These websites provide tools to help you find the best value petrol in your area.
The average price of unleaded fuel in the UK ranges from 139.1p/litre in Northern Ireland to 146.7p/litre in London. The average price of diesel ranges from 148.1p/litre in Northern Ireland to 154.8p/litre in London.
