UK petrol and diesel prices: 5p drop due in next fortnitght

Petrol and diesel prices remained steady in October, but experts say second lockdown should drive prices down soon

Kia Niro long-term - petrol station

Fuel prices remained steady in October, with a drop of around 5p per litre due in the next fortnight due to the second national lockdown.

Petrol prices dropped marginally from 114.53p on average to 114.43p per litre, while wholesale unleaded prices saw a 4.62p price drop. RAC Fuel Watch, which provided the data, reports Asda has already implemented a price cut of 2p per litre for petrol and 3p for diesel, with other supermarkets and retailers set to follow.

The RAC says diesel has been overpriced for two months now. Wholesale prices have fallen, just like those of petrol, but pump prices only came down 0.27p per litre on average in October to 117.82p. At supermarkets, petrol and diesel now average at 109.6p and 114p per litre respectively.

It now costs £60.29 to fill an average 55-litre family car with petrol, or £62.56 with diesel. In addition to Covid-19 and the related lockdown, it's thought the US election result may have an impact on prices, but what that impact might be is unknown.

RAC fuel spokesman Simon Williams said: “It’s likely to be a case of déjà-vu for drivers this month as once again fuel prices are starting to fall just at the point when we’re all driving less as a result of a coronavirus lockdown. It’s good to see Asda leading the way this morning with an initial price cut and we now need other retailers to follow suit as quickly as possible."

He added: “Diesel drivers... have reason to feel particularly hard done by, as arguably they have been paying over the odds for the fuel for two whole months now. We strongly urge retailers to lower the price of diesel, both for businesses and the country’s 12 million plus diesel car drivers.”

What makes up the price of UK fuel?

The price of fuel can be divided into three sections; the taxes imposed by the Government, the costs of drilling, refining and transporting, and the profit margins for the fuel companies.

For petrol, diesel and bioethanols, the Government gets around 65 per cent of the overall cost through fuel duty and value added tax (VAT). The fuel duty represents the fixed price of fuel – it stays the same regardless how much overall oil prices fluctuate. Currently, the Treasury adds 57.95 pence to each litre of fuel through fuel duty, and another 20 per cent through VAT. How much you pay in VAT depends on how much fuel you purchase.

The second biggest chunk comes from the wholesale costs of the fuel itself. The wholesale cost is a combination of currency exchange rates, global oil prices, and even domestic supply and demand.

Finally, the smallest share of what motorists have to pay for fuel comes from the filling stations themselves. A typical fuel station profits around 2p-5p per litre, but tough competition can drive this down further. Supermarkets increasingly use fuel prices as a loss leader to tempt customers in.

Why is supermarket fuel cheaper than an independent forecourt?

Supermarket forecourts usually offer the cheapest fuel prices and this is because of the market power supermarkets hold. Companies like Asda, Tesco, Sainsbury’s and Morrisons are all in competition with one another, so they keep fuel prices as low as possible hoping that when motorists come to fill their tank, they might do their weekly grocery shopping, too. 

There are persistent rumours that supermarket fuel contains fewer additives and is of lesser quality than fuel from traditional forecourts, but there’s little hard evidence of this. All fuel sold in the UK has to abide by the standards set in the Motor Fuel Regulation. 

Why is fuel so expensive on motorways?

Motorway fuel stations argue the reason their prices are higher is that many of them are open 24 hours a day and offer more services than a regular forecourt. Motorway fuel stations also pay high rent prices for the buildings they operate.

In more remote areas, fuel is often more expensive because of the higher transport and supply costs, but according to RAC fuel spokesman Simon Williams, this doesn’t apply to motorway stations: “We can see no reason why motorway fuel should be so much more expensive. In fact, arguably it is much easier from a delivery point of view than it is getting fuel to urban filling stations.”

Why is diesel more expensive than petrol?

Although diesel and petrol are taxed the same by the Treasury, historically diesel has been more expensive than petrol, as domestic refineries have struggled to meet demand. This has forced the UK to import diesel from other countries at a greater rate than petrol. In addition, diesel prices are pushed up by the cost of the additives that go into the fuel.

Furthermore, the gap between UK petrol and diesel prices widens during the winter. The end of the US “driving season” means retailers have a surplus of petrol they can’t export, so they sell it here at a lower price. Diesel demand, meanwhile, increases across continental Europe, where the fuel is commonly used in heating oil.

However, the influx of cheap diesel from countries like Saudi Arabia has turned the tide, swinging diesel wholesale prices closer to that of petrol, and bringing the pump price down with it.

What's your view on fuel prices in the UK? Do we pay too much for our petrol and diesel? What would you do about it? Join the debate in our comments section below...

Recommended

Covid-19: what it means for motorists and the car industry
Motorway
News

Covid-19: what it means for motorists and the car industry

Everything you need to know about how Covid-19 affects cars, motorists and the car industry in the UK
6 Apr 2021
May new-car registrations up 674%
Ford Fiesta
News

May new-car registrations up 674%

Another impressive year-on-year increase for new-car registrations, but not enough to bring the market back to pre-Covid levels
4 Jun 2021
Geneva Motor Show rescheduled for 2022
Geneva
Geneva Motor Show

Geneva Motor Show rescheduled for 2022

The GIMS organisers have announced the event will return next year, after this year’s show was cancelled due to the coronavirus pandemic
28 May 2021
UK car production on the mend but not fully recovered
Production line
News

UK car production on the mend but not fully recovered

A total of 68,306 cars were built in the UK in April 2021, up 34,573 per cent from last year’s factory shutdowns, but still short of pre-Covid levels
26 May 2021

Most Popular

Driving test update to preserve the manual gearbox
Dacia Duster gear lever
News

Driving test update to preserve the manual gearbox

With more drivers learning in autos and electric cars, the DVSA is looking to update the driving test so people can still drive manuals in future
16 Jun 2021
UN report highlights ethical problems with electric cars
Electric car charging
News

UN report highlights ethical problems with electric cars

Analysis reveals lithium refining takes 65 per cent of Chilean region’s water, while 40,000 child miners dig for cobalt in DRC
14 Jun 2021
Fiat 500 vs MINI Electric vs Honda e
Fiat 500 vs Honda e vs MINI Electric
Car group tests

Fiat 500 vs MINI Electric vs Honda e

The new Fiat 500, MINI Electric and Honda e are three retro-inspired electric superminis - but which is best?
19 Jun 2021
New Audi Q4 e-tron 2021 review
Audi Q4 e-tron 2021  front
Audi Q4 e-tron

New Audi Q4 e-tron 2021 review

We get involved with the new all-electric Audi Q4 e-tron SUV on UK roads for the first time
17 Jun 2021
Ineos Grenadier prototype 2022 review
Ineos Grenadier prototype
Ineos Grenadier 4x4

Ineos Grenadier prototype 2022 review

Can the Ineos Grenadier really fill the mud-splattered void left by the old Land Rover Defender? We take a first drive in a prototype to find out...
15 Jun 2021
Fan-designed Ford Puma ST Gold Edition revealed
Fan-designed Ford Puma ST Gold Edition
Ford Puma

Fan-designed Ford Puma ST Gold Edition revealed

Ford unveils a special edition Puma ST, with a black and gold colour scheme chosen by Ford fans over social media
18 Jun 2021
New Nissan Qashqai 2021 review
Nissan Qashqai 2021
Nissan Qashqai

New Nissan Qashqai 2021 review

We get behind the wheel of the larger, more comfortable and higher-tech Nissan Qashqai SUV in the UK
16 Jun 2021
New 2021 Vauxhall Astra to offer plug-in hybrid power
Vauxhall Astra render
Vauxhall Astra

New 2021 Vauxhall Astra to offer plug-in hybrid power

The new Vauxhall Astra will get a plug-in hybrid powertrain and a more premium image - here’s how it could look
17 Jun 2021
New 2021 Hyundai Tucson N-Line hybrid and PHEV on sale now
Hyundai Tuscon N Line - front
Hyundai Tucson

New 2021 Hyundai Tucson N-Line hybrid and PHEV on sale now

Hyundai names price for new Tucson N-Line hybrid duo with plug-in offering 38 miles of electric running
18 Jun 2021
New Skoda Enyaq iV 2021 review
Skoda Enyaq iV 80 Sportline - front
Skoda Enyaq

New Skoda Enyaq iV 2021 review

The new Skoda Enyaq iV is the Czech firm’s first bespoke electric car and we've tested the full range on UK roads
10 Jun 2021
Tesla Model 3 police car all set for evaluation by UK emergency services
Tesla Model 3 police car - front
News

Tesla Model 3 police car all set for evaluation by UK emergency services

Tesla hopes to offer UK police forces a new zero-emission emergency responder option with the Model 3 police car
17 Jun 2021
'The hydrogen underdog disruptor is back in town'
Toyota Mirai opinion
Opinion

'The hydrogen underdog disruptor is back in town'

Mike Rutherford says hydrogen-powered cars could still be a frequent sight on UK roads
13 Jun 2021
Motorists think they can get away with driving offences due to lack of road police
police speed gun
News

Motorists think they can get away with driving offences due to lack of road police

Lack of road traffic police officers in the UK is making it easy for drivers to break the law, according to a survey of 15,500 British motorists
16 Jun 2021
New Mercedes-AMG S 63 spied in minimal camouflage
Mercedes-AMG S 63
Mercedes S-Class

New Mercedes-AMG S 63 spied in minimal camouflage

AMG will soon launch a tuned version of Mercedes’s flagship limousine, probably powered by a 603bhp twin-turbocharged 4.0-litre V8 engine
18 Jun 2021