Bad news: Experts have warned that petrol could cost £1.40 a litre by the end of summer
Petrol could cost £1.40 a litre by the end of summer, experts warned yesterday. If prices at the pumps had merely matched inflation over the last 20 years, a litre of unleaded would cost an average of just 83.32p per litre, according to analysis from Auto Express magazine.
In reality, tax hikes, speculators and a poor exchange rate mean that today’s actual average price is 133.7p per litre. More bad news for motorists lies ahead, with further duty increases and crude oil rises set to see the price soar to almost 140p per litre by the end of August.
That average price would translate to even higher prices at motorway service stations, which typically charge about 10p more per litre. Without government intervention to reduce fuel duty, the average could hit 150p per litre by the end of the year. Auto Express enlisted industry analyst The Energy Institute to examine petrol prices over the last 20 years.
In 1991, motorists paid just 46.55p for a litre of unleaded, of which 17.21p covered the cost of the petrol itself – including crude oil and transportation. A further 22.41p was taken by the Government in duty, and another 6.93p in VAT.
By contrast, today’s motorists pay 133.7p a litre, of which 53.47p covers the petrol while a massive 57.95p is charged for fuel duty and another 22.28p for VAT. Duty has risen steadily, helped along by the fuel price ‘escalator’ introduced by the Conservatives in 1993.
Interesting: If prices at the pumps had merely matched inflation over the last 20 years, a litre of unleaded would cost an average of just 83.32p per litre Protests forced Labour to scrap it in 2000, but duty has continued to creep upwards. Another rise is planned for August, adding 3p per litre.
VAT has also increased to 20 per cent. However, the biggest swings are in crude oil prices, which make up the bulk of basic petrol costs according to broker EnergyQuote.
International speculators can swing crude oil prices by huge amounts – but while companies are quick to pass on increases, they are slow to act when prices drop. EnergyQuote predicts a peak 2012 price of 139.26p per litre for unleaded by the end of August. Diesel is predicted to peak at 145.89p a litre in October.