10 December 2013
Why are fuel prices so expensive in the UK and Ireland?
Looking at the reasons behind why fuel prices are so expensive in the UK and Ireland.
Running a car is never going to be the cheapest thing to do in the world. Apart from splashing out on the vehicle itself, additional costs such as tax, registration and insurance are all big but one off expenses. However, the biggest cost that we face with our cars is filling up the tank every week with petrol prices now higher than they have ever been.
Ten years ago, the country stood to a near standstill when motorists refused to pay prices that were around the 90 -95p. Instead, these prices have risen by nearly 50% with the average fuel price now around the 139p mark at most petrol stations. Even though there are constant promises that the overall cost will go down, the average price continues to get higher and higher. So what is causing the costs to soar so dramatically?
Well, there are several answers to the problem and none come with any easy fixes that will drop the fuel prices down overnight. Some of the problems include:
Weak Pound: At the moment, the US dollar is very much on the resurgence and is much stronger against the pound than what is has been over the past couple of years. Almost all of the oil trading in the world is done through dollars and with the European economy being at an all time low, it means that British gas companies are having to pay more for barrels than what they had to previously in the past.
Tax: Like everything else that we buy, petrol tax has increased significantly over the last decade or so. The petrol tax has risen by a staggering 24p per litre on petrol and 33p on oil since 2003 meaning that 60p of the total 138ppg is nothing but tax. This staggering rise essentially sees a separate tax being added onto the standard VAT rate meaning that there are virtually 2 taxes on petrol. This is needed so that the government can get additional levies on fuel in the future in a cost-cutting measure but comes at the expense of the taxpayer.
Rising Oil Prices: Unsurprisingly, oil prices have risen dramatically over the last few years with political instability in the Middle East particularly driving prices up on some occasions. Nowadays, it isn’t too uncommon to see figures reaching $100 per barrel which would have been inconceivable 5 or 6 years ago. Oil prices aren’t likely to drop in the near future as supply levels slowly deplete themselves and harsher weather extremes across the globe continue to push the industry to the limit.
The rising cost of fuel is something that is probably going to continue for the foreseeable future and we are going to have to rely on political figures to try and secure a drop in costs in the future. Aside from that, it means we’ll have to manage fuel more efficiently in the car if we want to drop our own personal fuel costs in the long run.
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