UK petrol and diesel prices: sky high prices forcing drivers off the road

Petrol and diesel prices, which are at their highest point since December 2014, are forcing motorists to cut back on their expenditure and drive less, according to new research.

A poll of over 17,000 motorists found rising fuel prices had forced 15 per cent of people to drive less and nine per cent to cut back on spending in other areas, while 14 per cent had done both. This means 38 per cent of those surveyed had made some sort of sacrifice as a result of the rising cost of fuel.

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The poll of AA members was conducted just two weeks ago, when the average cost of a litre of unleaded stood at 122.4p, and diesel was 125.2p. Those prices have since risen to 124.2p and 127.1p respectively, and have increased by 3p per litre on average since the start of the year.

Young drivers are worst affected by climbing prices, according to the research, with 55 per cent of 18-24 year olds saying they had cut back, either by driving less or reducing their expenditure in other areas.

Commenting on the findings, the AA’s president, Edmund King, said: “Once again, we’re beginning to see the spectre of some drivers having to make a choice between cutting back on household expenditure or being able to afford to drive to work. With rising mortgage costs and higher pension contributions, more and more drivers are being pushed towards that precipice”.

UK petrol and diesel prices: Petrol climbs to three-year high

UK petrol and diesel prices reached a three-year high in January, and are now more expensive than at any point since late 2014, figures have revealed.

The average cost of a litre of unleaded now stands at 122.24, having increased by 1.34p in January compared to December 2017. Diesel rose by 1.56p over the same period, with a litre now costing 125.04 on average. Those increases mean the prices for both petrol and diesel have now risen for the third consecutive month.

Unleaded prices in the south east of England are highest, with motorists there paying 123.15p per litre on average in January. Diesel drivers in the east, meanwhile, faced the highest fuel bills thanks to an average litre costing 125.73p. 

That means the cost of filling an average family car with petrol now stands at £67.23, while diesel drivers will pay £68.77. Those prices reflect respective increases of £4.35 and £5.51 per tank compared to July 2017. 

The analysis was carried out the RAC, whose fuel spokesman, Simon Williams, said there was a “glimmer of hope” prices could come down in February “as our current two-week forecast shows reductions of a penny for petrol and two pence for diesel.”

“The price of oil went through the $70 a barrel mark in January for the first time in more than three years”, Williams explained, adding that because sterling has strengthened against the dollar, wholesale fuel has actually become cheaper, as it’s traded in dollars. These savings, Williams said, should be passed on to motorists by retailers, who are “generally loath to pass on wholesale savings when they consider them to be marginal.” 

Investment bank Goldman Sachs, meanwhile, recently predicted oil would reach $82.50 a barrel within six months.

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UK"s cheapest fuel stations: postcode lottery can add £500 a year to petrol and diesel bills

A postcode lottery of petrol prices mean motorists can spend up to £500 extra on fuel every year, simply due to price fluctuations between filling stations.

While many of the UK’s most expensive petrol stations are in remote areas such as the Scottish Highlands, those using Holland Road station in Kensington, west London shelled out a whopping £1.74 on average for a litre of unleaded in 2017.

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Contrast that with Asda’s forecourt in Tamworth, Staffordshire, where a litre of unleaded cost an average of £1.098 in 2017, and it’s clear there are significant savings to be had by shopping around for cheaper petrol or diesel.


The figures, compiled for comparison website by Experian Catalyst, show three of the cheapest stations for unleaded are supermarket stations in Tamworth, while four of the cheapest for diesel are in the same Staffordshire town. 

An average motorist – who would cover 9,436 miles a year and whose 2016 petrol car would officially return 52.2mpg – according to RAC and Government figures respectively – would spend £892.60 on petrol in a year if they filled up at the Asda station, compared to £1,414.60 if they used the Holland Park garage.

Jason Lloyd, managing director of, said: “Finding the cheapest fuel can be a postcode lottery, as motorists on average can spend over £200 a year more simply because of where they live.” Lloyd advises drivers so set up email alerts to stay on top of local prices, and fill up in towns and cities with clusters of supermarket petrol stations if at all possible.

Cheapest UK fuel stations for unleaded petrol

Average prices for 2017

11.098Asda TamworthTamworthB78 3HB
21.098Asda Newport Isle Of WightNewportPO30 2QH
31.106Sainsbury’s TamworthTamworthB78 3HD
41.109Morrisons TamworthTamworthB77 2NY
51.11Asda Harwich AutomatHarwichCO12 3HJ
61.112Asda LeighLeighWN7 4JZ
71.116Avondale Service StationCwmbranNP44 1TT
81.116Sainsbury’s LeighLeighWN7 4JZ
91.117Morrisons LeighLeighWN7 4JY
101.117Asda YorkYorkYO32 9LF

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Cheapest UK fuel stations for diesel

Average prices for 2017

RankAverage (£)NameTownPostcode
11.094Asda Newport Isle Of WightNewportPO30 2QH
21.107Asda Tamworth AutomatTamworthB78 3HB
31.112Sainsbury’s TamworthTamworthB78 3HD
41.115Morrisons TamworthTamworthB77 2NY
51.129Asda YorkYorkYO32 9LF
61.129Asda LeighLeighWN7 4JZ
71.131Mccolls TamworthTamworthB77 2AF
81.132Sainsbury’s LeighLeighWN7 4JZ
91.132Morrisons LeighLeighWN7 4JY
101.133Sainsbury’s Monks CrossYorkYO32 9LB
What makes up the price of 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.

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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 petrol and diesel so expensive?

It seems bizarre that the digits on forecourt price boards have barely changed when global oil indexes have plummeted from $100 per barrel of oil in 2014 to below $40 in 2016.

Although many motorists think petrol stations are patting themselves on the backs and reaping in massive profits, the reality is that despite global oil prices tumbling, an average forecourt only makes two to five pence of profit per litre of fuel sold. The real reason why prices remain frozen is because of the costs the Government has attached to the price of fuel.

The Government’s share of taxes represents around two-thirds of the entire cost of fuel – and because the fuel duty is a fixed cost, it remains unchanged by global oil prices.

The drop in oil prices thus affects only around a third of the overall price of petrol and diesel, which explains why huge slumps in global oil indexes translate to only small savings at the pumps.

Why are global oil prices falling?

Global oil indexes are the current seismometers of a power struggle between the cartel-like Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC countries that have increased their own domestic production through alternative means of drilling for oil. 


Hydraulic fracturing or ‘fracking’ – the process of pumping water and chemicals underground to break apart the rock and release available oil and gas – has proven hugely successful in the North America. States like North Dakota have filled up with oil companies looking to cash in, causing a headache for the likes of Saudi Arabia and the other Middle Eastern countries in OPEC. Add in more oil coming from countries like Russia, Nigeria, and Venezuela, and it’s easy see how the increasingly crowded market could force prices down.

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Keen not to lose top dog status in the global oil supply chain, OPEC  responded by maintaining its production levels, thus supplying the market with more oil than is demanded. This is what is partially driving down the price of oil – and it is being done to make the means of oil extraction prohibitively expensive and to push smaller oil producers out of the market.

However, recently OPEC announced it would cut back production - suggesting the falling oil prices will come to an end. Oil prices rising by 11.75 per cent from between November and December 2016.  

Why does my local supermarket offer cheaper fuel 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.

However, the AA"s Fuel Price Report found that supermarket prices are getting closer and closer to prices on independent forecourts. The price gap between the Big-Four (Tesco, Asda, Sainsbury"s and Morrisons) and non-supermarket rivals has fallen below 3ppl for the first time in 12 months. 

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 diesel more expensive than petrol?
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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.

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. 

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Why is fuel so expensive on motorways?

Recent figures from the RAC suggest motorists topping up at a motorway fuel station pay up to 15 pence per litre more than elsewhere. 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.”

Motorway fuel price signs

A new pilot scheme by the UK Government is installing electronic boards on the M5 between Bristol and Exeter that display motorway fuel prices. Similar systems can be found in countries like France, and if the trial is deemed successful, more motorways across the UK will see electronic signs posting fuel prices. This would provide some much needed price transparency for motorway drivers.

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What is the rural fuel rebate?

The rural fuel rebate is a scheme operated by the UK Government that cuts 5 pence per litre from fuel prices in 17 of the country’s most rural areas. It was approved by the European Union and now benefits over 125,000 people living in areas like the Scottish Highlands and the Lake District.

These areas are often harder to reach, forcing forecourt to charge higher prices to account for the higher cost of supply. The rural fuel rebate aims to let residents and those travelling in these areas to benefit from cheaper fuel.

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...