In a blow to motorists across the country, the price of petrol and diesel surged in August, marking the fifth and sixth largest monthly increases in the past 23 years, according to data from RAC Fuel Watch.
As oil prices soared, petrol prices rose by nearly 7p per litre (6.68p), while diesel prices skyrocketed by 8p, putting extra strain on already burdened wallets.
By the end of August, the average price of unleaded petrol reached a staggering 152.25p per litre, a significant jump from the 145.57p observed at the beginning of the month. This increase resulted in an additional £4 burden for motorists when filling up their tanks, as fuel costs rose from £80 to £83.74. Diesel prices followed suit, surging from 146.36p to 154.37p per litre, making a full tank nearly £4.50 (£4.41) more expensive.
When compared to previous price surges, only a few months in recent history witnessed larger increases. March, May, and June of 2022 witnessed hikes of 11.61p, 11.15p, and 16.59p respectively, following Russia's invasion of Ukraine. Also surpassing the recent increase were October 2021 (7.43p) and the significant surges in March (22.06p), June (15.62p), and October (10.14p) of last year, in addition to October 2021 (8.16p) and May 2008 (8.43p) during which oil prices reached a record high of $144 per barrel.
The surge in pump prices can be attributed to the escalating cost of oil, which has climbed nearly $12 per barrel since July, now reaching almost $87 ($86.86) per barrel. The reduction in supply by OPEC+, a group of major oil-producing countries, caused the wholesale cost of fuel (the price paid by retailers) to escalate, subsequently burdening drivers at the forecourt. The coming weeks are uncertain, as concerns about the Chinese economy's condition and the conclusion of the summer driving season in the United States may limit further increases in fuel prices.
Motorists across the country are left anxiously watching the pumps, hoping for some relief from the relentless upward trend in fuel costs.
RAC fuel spokesman Simon Williams said: “August was a big shock to drivers as they had grown used to seeing far lower prices than last summer’s record highs. Seeing £4 or more go on to the cost of a tank in the space of just a few weeks from a pump price rise of 6-7p a litre is galling, particularly for those who drive lots of miles or run an older, less fuel-efficient car.
“While the increase is clearly bad news for drivers, it could have been far worse had the biggest retailers not let their inflated margins from earlier in the year return to more normal levels as wholesale fuel costs went up.
“Wholesale costs for both petrol and diesel started to rise in late July on the back of oil hitting $85. While the barrel price has stayed at that level throughout August, retailers had no choice but to pass on their increased costs at the pumps. Fortunately for drivers though, they have clearly been influenced by the Competition and Markets Authority’s investigation as, all of a sudden, margins are once again closer to their longer-term averages. It appears they used the wholesale price rise to subtly cover their tracks – after all, big reductions at the pumps soon after the CMA’s findings were announced would perhaps have been far too obvious a step.
“All we can hope is that this move by many big retailers back to fairer forecourt pricing remains when wholesale costs go down again. Only time will tell.
“That said, fuel prices in Northern Ireland are still lower than on this side of the Irish Sea with petrol at an average of 149.5p and diesel at 151.6p, however the gap has shrunk by around 2p a litre in a month which is much better news all round. Petrol is now only 1.5p cheaper in Northern Ireland while diesel is 2p less.”