Early on Tuesday morning, Prime Minister Theresa May revealed her surprising decision to hold a snap general election. The Prime Minister has said it will create certainty for Brexit; critics see it as a power grab while opposition parties are weak. Here, we assess what impact this important change might have on fuel prices over the coming months.
Impact on the pound
In response to the announcement, the value of the pound against the dollar dropped by 0.5%. It then rebounded, closing 2% up against the dollar, its highest level in over six months. In the short term, this will benefit fuel prices at the pump and if the pound continues to strengthen we could see prices fall by up to 5p a litre in the next month.
What the experts think
Broadly speaking, market experts believe the snap general election is good news for the UK economy and for Brexit negotiations, as it will strengthen May’s hand at the table with the EU (assuming she wins).
Morgan Stanley thinks it reduces the risk of a “disorderly Brexit.” The Conservatives will make clear in their manifesto that control of borders, courts and laws are the red lines that can’t be crossed, leading to a World Trade Organization hard exit if the EU fails to agree on these terms.
Deutsche Bank’s George Saravelos called the Prime Minister’s announcement “a game-changer for both the UK’s Brexit negotiations and sterling,” according to the FT.
In effect, the snap election will bolster the economy and the pound. Confidence in the market is up, although the FTSE fell following the news of the election, with companies worrying about tariffs imposed on them when operating outside the single market.
Likely impact on fuel prices
In the next few weeks, we expect fuel prices to fall slightly, as the wholesale price of oil per barrel continues to fluctuate in the mid $50 range. Petrol retailers buying with a stronger pound will enjoy lower costs as a direct result of sterling’s strength.
Most experts think that May will win this general election by a significant majority. The likely impact on fuel prices if that happens is positive.
If May is re-elected with a landslide, we’d expect the pound to rise further. Assuming the price of crude oil stays in the same range, that means prices could drop even more in the summer.
If May wins marginally, and there is a high Remain turnout, we could instead see a rise in fuel prices, as confidence drops about the future of the country when tackling Brexit and the economy.
We can see that Prime Minister Theresa May is trying to act decisively to create more of a mandate to push through the Brexit negotiations, with the full exit likely to be in 2022 due to transitional agreements. In the short term (to June) this looks like it will be good news for fuel prices. What happens when negotiations with the EU get underway in late June is less clear.
Tell us what you think about this snap general election decision. Can you foresee cheaper prices in the coming months or do you think that prices will go up because of this?
Ye sit might have a very very temporary effect of lowering fuel prices BUT until they are back in their warm and cossy offices and have checked that their salaries are sill coming in and the BANG – up they gon beyond where they are at present.
Yes it might have a very very temporary effect of lowering fuel prices BUT until they are back in their warm and cosy offices and have checked that their salaries are sill coming in and the BANG – up they go beyond where they are at present.
As fuel prices are not dependant on the cost of crude oil, but only based on what the greedy petrol companies can squeeze out of the consumer then after a temporary dip prices will no doubt follow the usual trend of trying to keep pace with the fuel company bosses salaries and bonuses. what May and the government do is of no consequence what so ever, big companies do what they like the only part of petrol prices that the government has any control over is the tax and duty.
@Richard McDonald
“the only part of petrol prices that the government has any control over is the tax and duty.”
61% of our petrol is tax and 59% of diesel. We are the highest taxed country in Europe relative to fuel. So perhaps look to Government policy before condemning fuel companies for their ‘greed’. Perhaps if the greens weren’t obstructing fracking at every turn this country might have a half decent energy policy and not force the taxpayer to subsidise all the insane onshore and offshore wind farms.
Election is announced – Pound goes up – Immediate effect – Diesel goes up 1.P. at our local supermarkets.
Is this the supermarkets just using the election as an excuse to raise prices?
Pound goes up – Immediate effect – Diesel goes up 1.P. at our local supermarkets.
The UK government wants to raise taxes by other means. It knows the prior Labour government had been punishing the motorist relentlessly because it was “easy money” as the pumps. So the government did a study into price fixing at the pumps by retailers and the local cartels, that supposedly compete on price, and this was a completely false misrepresentation on reality. The UK public knows that when the $ barrel Oil price goes up, the forecourt prices do the same day or within a few days as the competition in the local vicinity puts up prices too. Its about market commodity pressures and how well the retailers monitor this market to force up local fuel pricing. It’s really noticeable if fuel is purchased in certain parts of the UK where people tend to be on lower incomes and therefore fuel prices are lower – so why aren’t they lower everywhere you may ask. It’s because there is no “standard” for fuel price fixing and its left to retailers which is a scam successive governments have allowed since the 70s fuel crisis to ensure fuel prices and taxation income from it stays high. Of course, the newer way for fuel taxation is on emissions (ex-fuel) and it looks like the worse polluting vehicles will pay more for this too. Best thing to do is move to the USA where its cheap and you can drive a 6 litre jeep and easily afford to run it because prices are so low, and so is the fuel taxation.
prices will increase not decrease…..greed rules the roost……
Many speculators are reversing their short positions on the £ and shifting to shorting the Euro, so the £ should rise over 2017 with some predicting $2.40 by year end, which seems a bit over the top. It would help if speculators (Morgan Stanley, Deutsche Bank, HSBC and so called hedge funds (just as examples) had to put up 100% of their bets rather than work on leveraged margins. It is one thing to hedge a commodity or currency to fix the price at which you trade – most hedging is not that, it’s betting.
Second, despite protestations to the contrary nothing will ever change until we get some real competition. The fuel market is a Cartel and we all know that within a half mile or so of a discounter the Cartel members will match the price and outside that radius up it goes and the so called competition is little more than the odd fraction of a penny.
Typical, pound goes up and my local supermarket (Sainsburys) put their fuel up by a penny per litre.
They are always quick in putting the price up and very slow at bringing them down !!!
Since when have the oil companies or any UK Government needed an excuse to raise fuel prices? Supermarkets will tempt you with lower prices for a week or two then they’ll raise the price of a litre week by week for a while. It’s been happening for years.
It is a fact that since the Conservatives have been in power, fuel prices have been fairly steady and so the industrial cogs have been able to keep turning and reasonably well too. It is historical that the Labour governments of the past have always seemed to increase the tax including VAT on all types of fuel. We should not look to any changes to this especially where Mr C is stating that he will definitely increase the taxes paid by ‘Big Business’.
It is these Big Business (Some of which are owned by Labour supporters) that help to maintain our balance as an economic generator. This in turn helps us all to enjoy the lives we live in as pleasurable way as our personal finances permit.
Memories are short it seems but I can remember when the UK had some of the strongest industrial companies and manufacturers in the World until the greed of the unions and Labour politicians took them away. Remember GEC, AEI, IMI, and so on all destroyed by the greed of the Unions and the Labour party.
Please do not let it happen again.
Roy Forres might like to check his facts. Whilst I believe Labour getting in with Jeremy Corbyn would be a disaster, Labour did not cause the demise of GEC. As a former employee, I can tell you it became GEC Marconi, then Alenia Marconi, which was taken over by BAE Systems. None of this had anything to do with the Labour government.
Although it’s a million to one against , if Labour were elected , petrol would rise by £1.00 per gallon at the first budget ( and ‘road tax ‘ , plus an extra 50 per pint on beer) , as in every Labour budget since I started voting in 1959 !
Very wrong analysis.
The £ dropped 20% after the Referendum because the Market views Brexshit as bad move for UK.
Hard Brexshit is the worst of all possibilities. This ‘strengthening the hand of T May’for the hardest of all divorce, is nonsense to say that £ is happy about it. It can’t be.
Whatever the polls, there’s a chance, still a chance that Conservatives might be booted out. Good riddance. Then The Leave may be a bit softer, we stay in the Single market, EU gives consessions to us, etc
This small chance is the reason for this small rise of the Pound.
Labour has nothing to do with fuel prices.
Fuel is down worldwide, but we still pay high prices at the pump. The reason? Weak £ , highest taxes in the world.
Conservatives are the ones to raise taxes to the masses, cut taxes for the rich, cut spending, privatise NHS while lying that money instead of going to EU will go to NHS…
What a Brexshit mess…
I’ve just been imagining a Labour victory and Corbyn trying to negotiate a successful Brexit. It would be a bloodbath, the EU would make mincemeat of him. The result would be catastrophic for Britain. It’s no wonder that Corbyn that wants to talk about anything and everything other than how he would get good deal for Britain.
Yes Tony Mayes. A bit like imagining Theresa May’be’ having a live debate with Corbyn and Sturgeon. A bloodbath which would ruin her credibility for good. The woman’s got no backbone..Must agree with the majority on here though. The Oil companies will do whatever they want to and a business ‘over-friendly’ government will let them do so…
Ye sit might have a very very temporary effect of lowering fuel prices BUT until they are back in their warm and cossy offices and have checked that their salaries are sill coming in and the BANG – up they gon beyond where they are at present.
Yes it might have a very very temporary effect of lowering fuel prices BUT until they are back in their warm and cosy offices and have checked that their salaries are sill coming in and the BANG – up they go beyond where they are at present.
As fuel prices are not dependant on the cost of crude oil, but only based on what the greedy petrol companies can squeeze out of the consumer then after a temporary dip prices will no doubt follow the usual trend of trying to keep pace with the fuel company bosses salaries and bonuses. what May and the government do is of no consequence what so ever, big companies do what they like the only part of petrol prices that the government has any control over is the tax and duty.
@Richard McDonald
“the only part of petrol prices that the government has any control over is the tax and duty.”
61% of our petrol is tax and 59% of diesel. We are the highest taxed country in Europe relative to fuel. So perhaps look to Government policy before condemning fuel companies for their ‘greed’. Perhaps if the greens weren’t obstructing fracking at every turn this country might have a half decent energy policy and not force the taxpayer to subsidise all the insane onshore and offshore wind farms.
Election is announced – Pound goes up – Immediate effect – Diesel goes up 1.P. at our local supermarkets.
Is this the supermarkets just using the election as an excuse to raise prices?
Pound goes up – Immediate effect – Diesel goes up 1.P. at our local supermarkets.
The UK government wants to raise taxes by other means. It knows the prior Labour government had been punishing the motorist relentlessly because it was “easy money” as the pumps. So the government did a study into price fixing at the pumps by retailers and the local cartels, that supposedly compete on price, and this was a completely false misrepresentation on reality. The UK public knows that when the $ barrel Oil price goes up, the forecourt prices do the same day or within a few days as the competition in the local vicinity puts up prices too. Its about market commodity pressures and how well the retailers monitor this market to force up local fuel pricing. It’s really noticeable if fuel is purchased in certain parts of the UK where people tend to be on lower incomes and therefore fuel prices are lower – so why aren’t they lower everywhere you may ask. It’s because there is no “standard” for fuel price fixing and its left to retailers which is a scam successive governments have allowed since the 70s fuel crisis to ensure fuel prices and taxation income from it stays high. Of course, the newer way for fuel taxation is on emissions (ex-fuel) and it looks like the worse polluting vehicles will pay more for this too. Best thing to do is move to the USA where its cheap and you can drive a 6 litre jeep and easily afford to run it because prices are so low, and so is the fuel taxation.
prices will increase not decrease…..greed rules the roost……
Many speculators are reversing their short positions on the £ and shifting to shorting the Euro, so the £ should rise over 2017 with some predicting $2.40 by year end, which seems a bit over the top. It would help if speculators (Morgan Stanley, Deutsche Bank, HSBC and so called hedge funds (just as examples) had to put up 100% of their bets rather than work on leveraged margins. It is one thing to hedge a commodity or currency to fix the price at which you trade – most hedging is not that, it’s betting.
Second, despite protestations to the contrary nothing will ever change until we get some real competition. The fuel market is a Cartel and we all know that within a half mile or so of a discounter the Cartel members will match the price and outside that radius up it goes and the so called competition is little more than the odd fraction of a penny.
Typical, pound goes up and my local supermarket (Sainsburys) put their fuel up by a penny per litre.
They are always quick in putting the price up and very slow at bringing them down !!!
Since when have the oil companies or any UK Government needed an excuse to raise fuel prices? Supermarkets will tempt you with lower prices for a week or two then they’ll raise the price of a litre week by week for a while. It’s been happening for years.
It is a fact that since the Conservatives have been in power, fuel prices have been fairly steady and so the industrial cogs have been able to keep turning and reasonably well too. It is historical that the Labour governments of the past have always seemed to increase the tax including VAT on all types of fuel. We should not look to any changes to this especially where Mr C is stating that he will definitely increase the taxes paid by ‘Big Business’.
It is these Big Business (Some of which are owned by Labour supporters) that help to maintain our balance as an economic generator. This in turn helps us all to enjoy the lives we live in as pleasurable way as our personal finances permit.
Memories are short it seems but I can remember when the UK had some of the strongest industrial companies and manufacturers in the World until the greed of the unions and Labour politicians took them away. Remember GEC, AEI, IMI, and so on all destroyed by the greed of the Unions and the Labour party.
Please do not let it happen again.
Roy Forres might like to check his facts. Whilst I believe Labour getting in with Jeremy Corbyn would be a disaster, Labour did not cause the demise of GEC. As a former employee, I can tell you it became GEC Marconi, then Alenia Marconi, which was taken over by BAE Systems. None of this had anything to do with the Labour government.
Although it’s a million to one against , if Labour were elected , petrol would rise by £1.00 per gallon at the first budget ( and ‘road tax ‘ , plus an extra 50 per pint on beer) , as in every Labour budget since I started voting in 1959 !
Very wrong analysis.
The £ dropped 20% after the Referendum because the Market views Brexshit as bad move for UK.
Hard Brexshit is the worst of all possibilities. This ‘strengthening the hand of T May’for the hardest of all divorce, is nonsense to say that £ is happy about it. It can’t be.
Whatever the polls, there’s a chance, still a chance that Conservatives might be booted out. Good riddance. Then The Leave may be a bit softer, we stay in the Single market, EU gives consessions to us, etc
This small chance is the reason for this small rise of the Pound.
Labour has nothing to do with fuel prices.
Fuel is down worldwide, but we still pay high prices at the pump. The reason? Weak £ , highest taxes in the world.
Conservatives are the ones to raise taxes to the masses, cut taxes for the rich, cut spending, privatise NHS while lying that money instead of going to EU will go to NHS…
What a Brexshit mess…
I’ve just been imagining a Labour victory and Corbyn trying to negotiate a successful Brexit. It would be a bloodbath, the EU would make mincemeat of him. The result would be catastrophic for Britain. It’s no wonder that Corbyn that wants to talk about anything and everything other than how he would get good deal for Britain.
Yes Tony Mayes. A bit like imagining Theresa May’be’ having a live debate with Corbyn and Sturgeon. A bloodbath which would ruin her credibility for good. The woman’s got no backbone..Must agree with the majority on here though. The Oil companies will do whatever they want to and a business ‘over-friendly’ government will let them do so…