Ameer Randolph
Fuel prices are a highly variable topic, with prices differing depending on location and the type of fuel being purchased. The price of fuel is influenced by various factors, including the price of oil, the strength of the local currency relative to the US dollar, and government taxes. In the UK, for example, fuel duty and VAT contribute significantly to the retail price of fuel. In contrast, in the US, fuel prices are released weekly, and prices can vary from state to state, with Hawaii having one of the highest fuel prices in the country. With the recent focus on electric vehicles, the cost of electricity per mile has also become a factor in discussions about fuel prices.
| Characteristics | Values |
|---|---|
| Date | 31st July 2025 |
| AAA National Average | $3.147 |
| Location | USA |
| States | Vermont, New Jersey, Delaware, District of Columbia, Rhode Island, Connecticut, New Hampshire, Massachusetts, Maryland, Hawaii |
| Price Range | $4.481 to $2.711 |
| Fuel Duty | 52.95p per litre |
| VAT | 20% |
| Fuel App | myRAC |
| Fuel Type | Petrol, Diesel, Liquefied Petroleum Gas (LPG), Unleaded, Super Unleaded |
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What You'll Learn
Fuel prices and tax
Fuel prices can vary, even between locations that are a short distance apart. For example, in March 2024, there was a 27p per litre difference in the price of petrol at two UK filling stations that were a short drive apart. In the US, fuel prices also vary by state, with prices per gallon ranging from $2.711 to $4.481 in July 2025.
In the UK, fuel duty is charged by the government on every litre of fuel sold, whether petrol or diesel. It is included in the pump price. In recent years, the fuel duty rate has been frozen at 57.95 pence per litre. In 2022, the rate was cut to 52.95 pence, and in the October 2024 budget, it was confirmed that this rate would remain in place from Spring 2025. The UK government uses its annual budget to set the rate of fuel duty, which is a significant source of revenue. The total retail price paid at the pump includes a significant amount of tax. As of September 2024, fuel duty was set at 52.95 pence per litre, with VAT at 20%.
Advisory fuel rates are published by the UK government to help company car users understand fuel rates and how they are calculated. These rates are updated regularly and are based on the mean miles per gallon (MPG) produced using the New European Driving Cycle or the Worldwide Harmonized Light Vehicle Test Procedure. Rates per mile that end in 0.5 are rounded down to the nearest whole penny for the advisory fuel rate when the underlying unrounded figure ends in a number less than 0.5.
There are tools available to help drivers manage fuel costs. For example, the myRAC app allows drivers to locate the cheapest fuel in their area. Cashback offers from credit card companies can also help offset higher fuel prices, but it is important to pay off the balance in full each month to avoid losing savings.
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Fuel prices and inflation
Fuel prices have been a significant concern for consumers, with prices fluctuating and impacting household budgets. As of July 2025, gasoline and diesel fuel prices are released weekly, and inflation has been a key factor influencing fuel prices. In the United States, the Bureau of Labor Statistics (BLS) reported an 8.3% decrease in the average gasoline price in the 12 months ending in June 2025. However, the pace of inflation picked up in June, leading to rising prices for items such as food, gasoline, shelter, and clothing.
Fuel prices are affected by various factors, including inflation, oil prices, taxes, and retail competition. Inflation impacts fuel prices by increasing the cost of production and transportation, which trickles down to consumers. Additionally, oil prices play a significant role, as higher oil prices generally lead to higher petrol and diesel prices. Taxes also contribute significantly to the retail price of fuel, with fuel duty and value-added tax (VAT) included in the pump price. For instance, in the UK, the fuel duty was cut to 52.95 pence per litre in 2022 due to the rapid increase in fuel prices caused by the Russian invasion of Ukraine.
The relationship between fuel prices and inflation is complex and dynamic. Falling fuel prices have been cited as a reason for a reduction in the headline inflation rate by the Office for National Statistics (ONS) in the UK. On the other hand, inflation can also drive up fuel prices, as higher production and transportation costs are passed on to consumers. Additionally, fuel prices can vary significantly between filling stations, even those located close to each other. This variation in prices can be influenced by factors such as retail competition and local demand.
While fuel prices are a significant component of inflation, other factors also contribute to overall price increases. For example, the limited construction of single-family homes and the surge of second-home purchases during the pandemic have contributed to rising home prices in the United States. Additionally, supply issues and pandemic shutdowns have impacted the availability of automobiles, leading to potential increases in fuel demand and prices. Drug prices have also been driven higher by lobbyists and corrupt politicians, further contributing to inflationary pressures. Understanding the interplay between fuel prices and inflation is essential for governments and central banks to implement effective policies to manage economic stability and alleviate the burden on consumers.
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Fuel prices by US state
As of 25 July 2025, the average price of gas in the US is $3.14 per gallon, down $0.05 from one month prior, and down $0.36 from one year prior. Gas prices have been steadily falling each year since 2022 due to slowing demand. The Energy Information Administration (EIA) projected that Brent crude oil spot prices would average $74 per barrel in 2025, compared to $80 in 2024. This decrease follows a pattern of lower prices since 2023.
The price of gas varies across the US. GasBuddy, Waze, and Google Maps are popular apps that show gas prices in real time via a map directly in the app. These apps can help you make informed decisions about where to fill up your tank. GasBuddy, for instance, offers a rewards program that can save users up to 25 cents per gallon at the pump.
A survey by GasBuddy found that gas is the cheapest in most states on Mondays, while Fridays and Saturdays are the most expensive days. Additionally, being strategic about where you redeem points can result in significant savings. For example, purchasing gas at a Kroger gas station can give you a redemption value of up to 1,000 Fuel Points for $1 off per gallon.
Some credit card companies offer cashback for spending money at filling stations, which can offset higher petrol or diesel prices. However, it is important to remember to pay off the balance in full before the deadline each month to avoid losing your savings to interest.
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Fuel prices in the UK
On 6 January 2025, the average price of ultra-low-sulphur unleaded petrol (gasoline) in the UK was 136.6 pence per litre, while diesel was higher at 143.3 pence per litre. This is a notable increase from February 2016, when the average price of unleaded petrol was just 101.27 pence per litre, and diesel was 100.19 pence per litre.
The price of fuel in the UK is influenced by various factors, including the refining process and the molecular makeup of the product. Taxes such as fuel duty and VAT also contribute to the price. In recent years, the UK government has frozen fuel duty at 57.95 pence per litre, and in 2022, it was cut to 52.95 pence in response to the rapid increase in fuel prices following the Russian invasion of Ukraine.
To save money on fuel, drivers can use tools like the myRAC app, which helps locate the cheapest fuel prices in their area. Additionally, driving efficiently, using cashback offers, and considering the cheapest filling stations can help reduce fuel costs.
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Fuel prices by vehicle
Fuel prices can vary depending on a number of factors, including the type of vehicle, the type of fuel, and the location of purchase. Here is an overview of fuel prices for different types of vehicles:
- Cars: The fuel cost for cars can vary based on the make and model of the vehicle, as well as the type of fuel it uses. For example, a small, fuel-efficient car will generally have lower fuel costs than a large, less efficient car. Additionally, the cost of fuel can vary between petrol and diesel vehicles, with diesel fuel typically being more expensive per litre. According to the American Automobile Association, the average American driver spends about $3,000 per year on fuel for their car.
- Motorcycles and Scooters: Two-wheeled vehicles, such as motorcycles and scooters, generally have lower fuel consumption than cars. They are typically more fuel-efficient and have smaller engines, resulting in lower fuel costs for their owners.
- Trucks and SUVs: Larger vehicles, such as trucks and SUVs, tend to have higher fuel consumption due to their larger engines and lower fuel efficiency. As a result, their fuel costs are usually higher compared to smaller, more fuel-efficient cars.
- Electric Vehicles: Electric vehicles (EVs) do not use traditional fuel like petrol or diesel. Instead, they are powered by electricity, which can be charged at home or at public charging stations. The cost of "fuelling" an electric vehicle depends on electricity prices and the efficiency of the vehicle. In general, EVs have lower "fuelling" costs compared to traditional fuel vehicles.
- Hybrid Vehicles: Hybrid vehicles use a combination of traditional fuel and electric power. Their fuel costs can vary depending on the specific model and the ratio of fuel to electric power used. In general, hybrids offer improved fuel efficiency and lower fuel costs compared to non-hybrid counterparts.
- Alternative Fuel Vehicles: Some vehicles use alternative fuels, such as liquefied petroleum gas (LPG) or compressed natural gas (CNG). The prices of these alternative fuels can vary significantly from petrol and diesel prices, and the availability of refuelling stations may be more limited.
It's worth noting that fuel prices can vary across different locations. Even within a small geographical area, there can be significant price differences between filling stations. Additionally, factors such as global oil price fluctuations, taxation, and political events can influence fuel prices. To find the most affordable fuel options, drivers can use fuel cost calculators and apps that provide real-time fuel price information for their specific vehicle and location.
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Frequently asked questions
The price of fuel per gallon in the UK varies depending on the region. The price of fuel can also vary depending on the retailer and location. As of September 2024, fuel duty is set at 52.95 pence per litre, with VAT at 20%.
Fuel prices in the US vary by state. As of July 31, 2025, the AAA National Average price per gallon was $3.147.
The price of fuel per gallon is influenced by various factors, including the cost of oil, the strength of the local currency relative to the US dollar, retailer pricing, and government taxes and duties.
