Mar 25, 2015
Just a couple of weeks ago, we talked about the fact that UK diesel drivers are being given a hard time at the moment, especially if they live in Islington, London, where they’re now being charged an extra annual fee for parking their vehicles outside their homes.
On top of this, the government seem to have completely changed their stance on diesel vehicles, now viewing them negatively in terms of pollution after supporting their use for many years.
Now there’s yet another part to the story, in the form of a Sky News report stating that diesel drivers are also being “taken for a ride” with regard to the cost of their fuel.
The story is based on comments from The RAC, who have found that although diesel only costs a penny more than unleaded on a wholesale level, the cost variance rises to approximately six pence more by the time the fuel arrives at the forecourt.
The RAC believe that retailers are maintaining a higher margin on diesel because it’s the fuel used by the majority of commercial vehicles.
The Petrol Retailers Association has defended the pricing, saying that a lot of the diesel fuel purchased in Britain is purchased for business use, using fuel cards, the use of which carries certain “tax incentives.” However, this will be of little comfort to those who have chosen a diesel car as their personal vehicle, perhaps even because the government suggested it was the wise thing to do at the time.
Interestingly, the “state stance” on diesel varies across European countries. Britain is one of a few countries currently charging more for diesel than for unleaded, but most other EU nations, including Austria, Belgium and France, all charge less for diesel.
Mar 18, 2015
UK Chancellor George Osborne has just delivered his pre-election budget statement, and it included some reasonably good news for drivers, in the form of an announcement that the current freeze on fuel duty will remain, cancelling a planned increase in September.
The Chancellor was keen to point out that this represented the “longest duty freeze” in over two decades, which apparently saves families £10 each time they fill their fuel tank.
The announcement of this freeze will perhaps go some way to pacifying campaigning groups. However, plenty of people were hoping for more, in the form of an actual cut in fuel duty.
Moving aside from the government’s rhetoric, there should really be some room for further manoeuvre on fuel duty. As we discussed in a recent news item, British petrol is actually the second cheapest in the whole of Europe, until taxes are added on in the form of fuel duty and VAT. It’s perhaps worth keeping this in mind before regarding this freeze announcement as “generous.”
In other budget news, Osborne also announced a comprehensive overhaul to taxes affecting the North Sea oil industry, to protect it from the fallout caused by the reduction in global oil prices. These changes include a backdated reduction of 10% in the supplementary tax charge for oil companies, as confirmed in a BBC report.
IMAGE CREDIT: Flikr
Mar 11, 2015
Car insurance claims are on the up in the UK, and this is having a knock-on effect on insurance company share prices, according to a recent report in The Financial Times.
The article specifically refers to a nine percent fall in the value of Esure shares, but also cites smaller share price falls for other insurance companies, including Admiral and Direct Line, and seems to suggest that rising claims and lower share values are a trend that will continue.
Lower petrol prices are cited as a likely reason for the increase in claims. An insurance sector analyst surmises that “more people are driving, they are driving faster and there are more accidents.” While the latter two points are quite possible, the first is somewhat at odds with a recent survey that suggested cheaper petrol hadn’t persuaded people to drive more.
In the car insurance industry, everything boils down to what’s known as the “claims ratio and loss ratio,” essentially the balance of what the firms earn in premiums against what they pay out. When more people drive further and faster, as will likely happen if fuel prices remain low, the ratios will fall at the insurance companies’ expense.
The likely outcome? Well, it’s probably not even that cynical to predict a future rise in premiums…
Mar 10, 2015
Prepare to feel annoyed! The Daily Mail has revealed that the cost of petrol in the UK is almost the lowest in the whole of Europe (second only to Estonia). However, once taxes are added on, petrol in the UK becomes the fifth most expensive in Europe, with only Greece, Holland, Italy and Malta paying more.
According to The Daily Mail report, the cost of petrol before tax in the UK is just 32.4 pence per litre. The majority of the difference between that figure and what you pay at the pump is due to VAT and fuel duty.
Surprisingly, there’s even been talk of fuel duty being raised in the wake of oil price reductions, but hopefully this won’t come to fruition in the run-up to an election. On the contrary, both The RAC and FairFuel UK are currently campaigning for a reduction in fuel duty in advance of the forthcoming UK budget.
The reality of what fuel really costs before taxes are added on make the government’s vocal calls for retailers to pass on oil price savings seem rather hypocritical. As Stephen Glaister, the RAC Foundation’s director rightly says, the person with the “biggest influence” on what we really pay is Chancellor George Osborne. It’s therefore no surprise that he attempts to deflect attention elsewhere.
Mar 5, 2015
There’s some good news today for UK drivers located in certain rural areas. The European Union has confirmed a fuel duty relief scheme that could bring the price of petrol and diesel in these areas down by as much as five pence per litre.
The scheme had already been approved by the European Commission, but this EU “rubber stamping” means that it can now begin from 31st May this year. This was confirmed today by a BBC report.
The idea behind the initiative is to offer relief to fuel retailers in outlying areas to help cover the transportation costs to forecourts. In turn, this should mean that there are fewer disparities between rural and urban petrol prices. The scheme is, in fact, already in place for certain locations, such as the Isles of Scilly and the Hebrides, but will be extended to cover a number of new areas.
These include a range of regions in the Scottish Highlands, and some select areas in Cumbria, Devon and Yorkshire.
Rural petrol stations wishing to benefit from the scheme will be able to apply for registration from the beginning of next month. Hopefully this move will go some way to readdressing the sense of unfairness felt by drivers in these areas.
Feb 27, 2015
Against a backdrop of a small upward trend in petrol prices recently, the AA have stepped out and said that motorists are suffering from the effects of “oil company greed.”
In a report in The Belfast Telegraph, AA president Edmund King has once again criticised the fact that garages tend to quickly raise prices when oil costs move upwards, but are far slower to act when the oil price changes in the opposite direction. This is a phenomenon widely referred to as the “rocket and feather effect.”
This time, King has singled out mainstream garages and pitted them against the supermarkets, saying that the supermarkets brought prices down more quickly when oil prices fell and are now “reluctant” to raise them in the wake of increases.
This certainly rings true based on some ews we announced yesterday, referring to the fact that Sainsbury’s is launching a voucher promotion that, at least temporarily, will allow many motorists to purchase petrol at less then one Pound per litre, so long as they do a grocery shop in a Sainsbury’s store worth at least £30.
The RAC seem to agree with the AA, with spokesman Simon Williams saying that retailers have “quietly passed on” their own price increases. However, with the supermarkets piling the pressure on, other garages will surely have to do something to compete, or they will risk seeing their forecourts deserted while motorists queue at the supermarkets!
Feb 18, 2015
If you have a Shell petrol station near you, the chances are you will have a whole new fuel payment option available to you later this year.
Based on a report in The Telegraph, the new system will use the PayPal payment app, and will be first rolled out to members of Shell’s “Driver’s Club” scheme from April this year. By the end of the year, paying by mobile should be an option to all customers at “the majority” of Shell’s 1000 forecourts, via the PayPal app or Shell’s own “Motorist” app.
The idea is that the system will reduce queues by allowing customers to pay without having to go into the petrol station (unless, of course, they wish to buy additional items).
One question that does occur, and one that’s not mentioned in the report, is that petrol stations generally request that customers don’t use their mobile phones on the forecourt for safety reasons. Quite how this will be handled remains to be seen!
Payment via PayPal’s app is already available at over 8000 shops and restaurants in the UK, including such chains as Gourmet Burger Kitchen and Wagamama. Orders are paid for “up front” and then a receipt is emailed when the transaction is complete.
Time will tell whether this modern payment method will catch on, but in a society where people do more and more with their smartphones, there are sure to be plenty of tech enthusiasts keen to try it out.
Feb 16, 2015
Last week, we talked about how UK petrol prices had begun to creep upwards again the wake of a rise in the wholesale oil price. Subsequent news stories towards the end of the week suggested these rises were only temporary, but there’s another facet to the story that’s begun to develop as we begin another week.
Today, various news outlets including The Grimsby Telegraph, have reported on how campaigning group FairFuelUK have called for an “OffPump” inquiry into the “rocket and feather” effect on petrol prices when the oil prices changes.
The report states that at certain garages, the small rise in the oil price resulted in an immediate “rocket like” rise at the pumps, to the tune of as much as four pence per litre. FairFuel UK want to know why such drastic rises happen as soon as the oil prices goes up, while price reductions are so much slower to appear when the oil price goes down.
It’s not the first time there’s been calls for greater transparency into a pricing phenomenon that FairFuel UK describe as “pure monetary greed.” The group’s lead campaigner claims that the government are continually “ducking” calls to investigate.
Apparently the government’s Treasury Minister supports this call to action. Time will tell whether anything comes to fruition.
IMAGE CREDIT: Wikimedia Commons
Feb 5, 2015
For many years, diesel cars have been seen by many as more economical and more environmentally friendly than their petrol equivalents.
Much of the reason for the latter is that governments have chosen to focus on CO2 emissions when determining car tax rates, and this had lead to many people choosing diesel vehicles as the most wallet-friendly choice.
However, in recent times, diesel cars have suffered something of a backlash. While CO2 emissions may be lower in diesels, other emissions that damage the environment, such as particulates and nitrogen, are in fact much higher in these vehicles.
According to a report on Gas 2, Barry Gardiner, the UK’s Shadow Environment Minister, has said that the UK’s past approach of basing tax on CO2 emissions alone was “the wrong decision.” He’s even gone as far as saying that the outcome of the decision has caused a “massive problem for public health.”
Over the Channel in France, there’s been a similar U-turn on diesel. The French prime minister has made a similar pronouncement that their preference for diesel vehicles was “a mistake.”
Back in July last year, we reported on how London mayor Boris Johnson had put forward a proposal to charge diesel drivers a “pollution charge” in central London. With governments in more than one country now seeming to come around to the idea that diesels are more polluting than petrol cars, one can only assume movements like this will continue to gain traction.
It’s very clear who all this is unfair on: the many motorists who bought diesel cars because they were conditioned to think they were the more sensible and responsible option. If they are going to be encouraged to swap their vehicles, one must hope that some sensible incentives appear.
Jan 28, 2015
Petrol prices have now been falling steadily for months, and you’ve probably noticed the positive financial impact already – whether than means a little more money in your pocket, or a bit longer between trips to your local petrol station.
Extrapolated over a year, the savings are likely to prove even more impressive. In fact, according to a study reported on yesterday in The Telegraph, the real-life savings actually have an equivalence to a one-percent cut in the nation’s rate of income tax.
Obviously, individual circumstances will dictate the accuracy of this comparison. Those who only rarely drive won’t find as much extra cash going spare as those who cover thousands of miles. However, the study says that for some, the savings could add up to an impressive annual figure of £770.
All in all, based on current prices (which could yet go even lower), the country is expected to save £5.3 Billion pounds this year due to cheaper fuel. This is on top of a similar windfall of just over £500 Million due to lower predicted energy bills.
The £770 annual savings figure refers to a 25 miles per gallon vehicle, driven for 20,000 miles during the year. For most, the savings will be a little more modest, probably around £146 on average. But let’s not forget that if prices continue to fall, the savings will increase in tandem.
