The AA has warned motorists that petrol prices are once again nearing record highs, with president Edmund King accusing profiteers of pushing up prices at a time of year when the cost has traditionally dropped. Yet while drivers are suffering when filling up their cars at filling stations, European refinery profits have soared to a five year high, the AA claim.
The Daily Telegraph reported this week that speculators are now purchasing futures, or options to buy stock in later months, in the hope that oil and petrol prices will rise later in the year. This has a direct effect upon the price motorists pay at the pumps as it disproportionately pushes up the value of the petrol sold in this country.
At an average cost of 139.71 pence per litre, petrol prices have now come within three pence of the record set in mid-April this year – at a time where an imminent fuel crisis looked likely. This means that prices have climbed by almost 9 pence per litre since the 1st July, which seems rather unfair given that July 1st was only 2 months ago.
Diesel, meanwhile, costs an average of 143.98 pence per litre now, having risen almost eight pence since the start of July. The record set in mid-April was 147.93 pence per litre, and the AA has warned that if conditions do not change motorists may be in for yet more broken records this year.
Profiteering cannot be held entirely accountable for the price rises; however, as the global price of oil has risen significantly in the past two months. Whilst in early July the cost of crude oil was $96.78, that price has soared to over $113 in the following two months. This is partly due to political concerns regarding the stability of the Middle East, which has triggered an international rush for Brent Crude.
Additionally, there is a significant lack of refining capacity internationally, meaning that the refineries still in operation can afford to up their prices. After all, with less competition, their product is becoming far scarcer and they can therefore add several pence per litre without fear of being priced out of the market. This has made refined Brent Crude – the oil used by British motorists – extremely profitable to sell. As such, there is a huge demand for petrol worldwide, largely centred around America and Asia.
Yet none of these reasons will be good enough for British families, who will see their disposable income take another hit at the commercial properties. The AA estimates that a two car household can expect to add another £18.90 on to its monthly petrol bill, assuming of course that prices do not climb once more.
Mr King says; “Once again UK drivers find themselves being dragged over a barrel, as does business and Bank of England inflation targets.
“Last week, Government statistics showed that traffic on minor country roads fell by 5 per cent – such was the impact of record high fuel prices on rural communities.”
Last week, the Office of Fair Trading announced an official investigation into petrol prices, but Mr King believes that it is all too little, too late for British motorists who want the issue resolved now.
He continued; “Drivers are growing weary of words – they want action.
“The (former transport secretary) Justine Greening initiative to introduce a wholesale price track this year and make fuel prices more transparent would have been a big step forward, but now it is on hold.”
The UK Petroleum Industry Association refused to comment on the AA’s accusations, as they cannot comment on petrol prices that are less than three months old. Unfortunately, it seems that this may be simply the beginning of much greater problems for British motorists who could well be facing much higher petrol prices three months down the line.
How do you think the problem of UK petrol prices should be addressed? Do you believe that the tax on fuel should be lowered at times where global oil prices hit certain high prices, or do you think the regulation of refined oil prices is the best place to start?
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