At PetrolPrices.com, we’re keen to keep our members and readers abreast of what’s happening in the world of petrol and diesel. It seems we’ve only just reported on one fuel price story when another rears its head. Last week came with worrying news that the Chancellor of the Exchequer is considering increasing fuel duty and this week we learn that world events may mean yet another rise in the cost of fuel.
Independent advisory body, The International Energy Agency (IEA) has cautioned that the price of oil may be about to climb during the following months due to declining oil production in major oil-producing countries. So, why is the oil industry struggling?
Higher prices may be on the way
After the tenth consecutive week of fuel inflation, drivers are witnessing the most expensive petrol and diesel since 2014, yet things aren’t looking to improve as a series of factors are against us.
When US President Trump pulled out of the Iran nuclear deal and imposed heavy sanctions, oil-production slowed and the oil-abundant country of Venezuela is struggling to produce oil as the country continues to spiral into further economic crisis.
Brent crude was as low as $65 a barrel just a month ago but has since seen prices increase to $70-$80 a barrel, yet, according to the IEA, we may witness even higher prices due to decreasing oil-production in Venezuela and Iran—and fighting in Libya is affecting the oil industry, too. This isn’t good news for drivers who, after facing multiple price hikes, are seeing petrol and diesel at their highest prices in four years.
In June, in a drive to reduce prices, the oil cartel Opec agreed to increase production and, although the major oil-producing countries have pumped more crude oil—in August they produced a record 100 million barrels of oil a day—the production problems in Iraq and Venezuela may scupper OPEC’s efforts.
On the brink of record highs
The weakened value of the pound and increasing oil prices have both increased the cost of filling up our tanks. At the time of writing this, PetrolPrices.com data shows the average cost of a litre of petrol as 131.4p while diesel stands at an average 134.3p per litre. The cost of filling up an average 55-litre family car with unleaded or diesel has increased by around £6.00 since April.
Simon Williams, Media Relations Manager of the RAC said “Fuel prices are teetering on the brink. If oil supply gets any tighter, or the pound gets any weaker against the dollar, we could see the price of a litre of fuel climb to very unwelcome heights,” and warned of the potential of getting close to the record highs of 2012. The IEA said if Venezuelan and Iranian exports continue to fall, markets might tighten and oil prices could rise “without offsetting production increases from elsewhere.”
Brent crude — the international measure of oil prices — was today trading at $78 a barrel, yet those at the HSBC Bank who track oil prices said the chance of the price going up to $100 a barrel was, “not out of the question, given the increasing lack of global spare capacity” and UBS bank analysts said this would increase global inflation from 3% to 4%.
The International Energy Agency (IEA) has said there’s a chance that the cost of oil will soar even higher over the next months. If this happens, motorists will need to find more money to cover the cost of filling up at the pumps, and the chancellor will be in a very sticky situation as he decides whether the Government should increase fuel duty.
The tax on fuel hasn’t increased since 2011 but the chancellor has been considering raising fuel duty to increase public spending, yet one must ask—since transport costs are the largest part of a family’s budget—will the average motorist have any money left to spend?
For many people, it’s not possible to replace all of their travel with alternative modes of transport, less so if they live in a rural area. This means having no choice but to pay the high petrol and diesel prices and trim their budgets in other areas — or risk job loss, poverty, and social isolation. It’s no wonder many drivers feel somewhat held to ransom.
While we wait to see what will happen at the pumps, drivers can still reduce their motoring costs. Why not download the PetrolPrices.com app for maximum convenience and money-saving on the move.
Are you prepared for a further increase in petrol and diesel prices? Will you have to cut other areas of spending? Are you able to make use of cheaper forms of travel? What do you think is the best way to prevent rising fuel costs? Let us know in the comments.