Fears for petrol prices after oil surge
The biggest ever one-day jump in crude oil costs has led to fears that drivers face another hike in petrol prices.
On Monday the cost of oil rose 16%, in reaction to the US government's decision to bailout the banking system, and on Tuesday the price remained well above $100 a barrel. Despite the price of crude oil now starting to fall back, the spike has prompted concerns of another big climb in prices at the pump.
The timing couldn’t be worse. Drivers have already had a tough year, thanks to high petrol prices, congestion charging, and the pending road tax reforms, although they did get some respite when the government delayed the 2p increase in fuel duty.
Adrian Tink, motoring strategist at the RAC, says petrol suppliers would risk losing the confidence of their customers if they pass on the spike through forecourt prices.
“The cost of crude oil is still 20% lower than it was at its height in July, but petrol prices have only fallen by 1%,” he adds. “We hope that petrol suppliers won’t pass this spike on, and in fact we still see room for prices to fall further.”
Some commentators are confident the spike won't hit drivers. Alexander Wells, a spokesman for the Retail Motor Industry Federation, says it will have little or no impact on petrol prices.
“Crude oil costs normally take six to eight weeks to feed through to petrol prices, but this will only happen if higher prices are sustained," he explains. "We don’t believe they will be and motorists may not see any change to petrol prices.”
The risk of another hike in petrol prices has led to renewed calls for the government to take action and protect motorists. The RAC and the Conservative Party have previously suggested that petrol prices should be offset against road tax. And the RAC is also calling for the government to consider introducing a temporarily cap on petrol prices on a national level, to stop some forecourts charging up to 10% more than their nearest competitors.
Although such a move is in direct opposition to Labour’s belief in free market forces, Tink says “exceptional times call for exceptional measures”.
“Petrol price hikes don’t just impact motorists – they also have a bearing on food costs and the pricetags of goods in the shops,” he adds
Advice to drivers
Even if petrol prices do soften in the coming weeks, they remain high and at a time when the general cost of living is rising, many motorists are feeling the pain.
Unless you are able to reduce the amount you use your car, it may feel as though petrol costs are just another expense that needs to be absorbed. But there are ways you can cut the amount of petrol you use as well as the cost of petrol you buy.
1. Pay less
The AA says that drivers who are choosey about where they fill up could benefit financially. Websites such as petrolprices.com allow you to shop around for the cheapest forecourts in your area.
It is also worth checking out how much petrol costs at forecourts of supermarkets in your area. Generally speaking, supermarkets tend to offer cheaper petrol than other outlets, and following a recent price war among some of the biggest names, fuel costs have fallen.
In contrast, the petrol pumps at motorway service stations tend to be the most expensive place to fill up, so if you’ve got a long journey ahead of you try to plan in advance and buy your petrol before you set off or at a petrol station off the motorway.
2. Use less
There are many ways you can reduce the amount of fuel you use.
The Moneywise top fuel-efficient driving techniques include: changing up a gear as soon as possible; keeping your tyres properly inflated; removing unnecessary weight such as roof racks; and turning off the air conditioning.
For more Moneywise tips of reducing your petrol usage click here.