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PANIC STATIONS AT THE PETROL STATIONS: Record diesel prices put taxi and private hire costs under serious pressure
Record diesel prices are adding to the cost of keeping taxis and private hire vehicles on the road, with drivers facing an immediate squeeze on earnings and operators weighing how to manage higher running costs.
The average UK diesel price has reached 200.01p a litre, according to the figures supplied by the RAC, taking a 55-litre fill-up to £110.01.
At that price, a diesel car averaging 45 miles per gallon uses about 20p of fuel per mile. A driver covering 10,000 miles would spend roughly £2,020 on diesel over a year, before allowing for insurance, servicing, licensing, finance and other vehicle costs. The RAC’s figures put the increase in the cost of a 55-litre tank at £31.70 since 28 February.
For taxi and private hire drivers, the cost per working mile can be harder to contain than a car’s headline fuel consumption suggests. Miles driven without a passenger, travelling to a pick-up or returning from a drop-off still consume fuel but generate no fare. Drivers whose work involves long pick-ups, airport transfers or travel between busy areas may therefore see a larger share of their shift absorbed by fuel.
It’s also worth noting the increasing the cost of operating a black cab TX4 diesel taxi. The manufacturer’s brochure gives the automatic TX4’s urban fuel consumption as 25.7 miles per gallon. At the RAC’s reported average diesel price of 200.01p a litre, that equates to an astonishing 35.4p in fuel for each mile driven.
On that basis, 100 miles costs about £35.40 in diesel, while 200 miles costs around £70.80. A taxi covering 10,000 miles would use approximately £3,540 of fuel at this rate, before servicing, insurance, licensing and other vehicle expenses.
The pressure reaches operators as well as individual drivers. Businesses running fleets face higher fuel bills across multiple vehicles, while drivers working through booking platforms may have limited ability to change the price a customer pays for a journey. Private hire fares are generally set by the operator, while the rules and commercial arrangements of individual operators or platforms can affect whether and how quickly prices change.
Drivers and operators can act now by measuring fuel use against total miles driven, including unpaid mileage, and reviewing where avoidable journeys arise. Better allocation of bookings, reducing unnecessary repositioning, coordinating shifts and checking whether fuel cards or fleet discounts offer a lower pump price can help limit the immediate impact.
These steps cannot remove the price increase, but they can identify where fuel is being spent without producing income.
For the longer term, a sustained rise in fuel costs is likely to feed into discussions about tariffs, driver pay and contract rates. In England and Wales, councils can set or vary the maximum fares for hackney carriages under section 65 of the Local Government (Miscellaneous Provisions) Act 1976. A proposed variation must be published with at least 14 days for objections. The same power does not generally extend to setting private hire fares, which are determined by operators.
A tariff review would need to weigh fuel alongside other driver costs and the effect of higher fares on customers. Transport for London, for example, uses a cost index that considers changes in taxi operating costs and average national earnings when reviewing black cab fares. That provides a model for considering a range of costs, but it does not mean a short-term spike in diesel prices automatically leads to an immediate fare change.
The immediate issue for drivers is cash flow and viability of service. Over time, if higher prices persist, the trade may press councils to review hackney carriage tariffs and operators to reassess private hire pricing or driver payment arrangements. Any changes would however take time and would have to balance the viability of the service with what passengers and drivers can afford.
The RAC has linked the record pump prices to Middle East conflict and disruption risks around the Strait of Hormuz. It has also warned that a possible US diesel export ban could add further pressure, although the material supplied does not establish whether such a ban will be introduced. For taxi and private hire businesses, that uncertainty makes it harder to plan budgets and decide whether current fuel costs are temporary or should be built into future rates.
