Jul 19, 2022

Will UK Petrol Prices Go Down in 2024?

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As many businesses and individuals struggle with the cost of living crisis and ever increasing fuel prices, many are wondering if the cost of petrol will ever go down again. In this article, we’ll be explaining why fuel prices are rising and whether we can expect to see them go down in the near future.

On 22nd March 2022, petrol costs rose to record highs of over £1.67 per litre on 23rd March and diesel reached £1.79. In response to these extortionate prices, Chancellor Rishi Sunak reduced fuel duty by 5p a litre for 12 months until March 2023 in an attempt to counter the price rises and make fuel more affordable.

This, as well as the drop in oil prices, contributed to a slight decline in average pump prices at the beginning of April. However, many drivers did not feel the full benefit of the savings as the average price of petrol fell by just 4p per litre and diesel was reduced by just 2p.

RAC fuel spokesman Simon Williams suggests that this is down to the large retailers “protecting themselves from future rises” by keeping prices high, despite fuel duty and oil prices dropping.

“They will no doubt feel they were justified in not lowering their forecourt prices as wholesale costs are now rising again, in part due to the pound losing ground on the dollar, making it more expensive for retailers when they buy new stock," he said.

Why are Fuel Prices Going Up?

The simple explanation for why fuel prices are rising in the UK is that the cost of oil has gone up. In 2020, the price of a barrel of crude oil was roughly $40, however, when the coronavirus pandemic hit and affected supply and demand, the cost more than doubled in 2021.

At the beginning of January 2022, the cost of a barrel of crude oil was $79 and quickly rose to $92 by the end of the month.

Following Russia’s invasion of Ukraine on 24 February, and the sanctions of Russia's oil exports, the cost of cruise oil increased even further to more than $105, with Brent crude climbing to almost $139 per barrel on 7th March as new sanctions were imposed on Russian oil exports.

The reason why the cost of crude oil directly impacts petrol and diesel prices as well as wholesale fuel prices is because crude oil is used to make petrol and diesel.

With many European countries relying on Russia’s oil and gas reserves for its supplies, Western leaders pledged to cut their supplies from Russia and source them from other countries.

This has meant that the demand for petrol from other countries has skyrocketed, so despite only 8% of the UK’s oil imports coming from Russia, we’re still seeing price increases on all petroleum products.

Will Fuel Prices Come Down?

Economic forecaster the Centre for Economics and Business Research (CERB) said it expects motor fuel prices will fall along with the price of oil and that petrol prices could drop quickly by 8p per litre in the coming months, however, if the government decides to follow the recommendations of RAC spokesperson Simon Williams, prices could drop even sooner.

He proposes that instead of reducing fuel duty, the government should be cutting VAT in order to make it “fairer and more powerful.”

“Unfortunately, Monday’s break from daily rising prices was far too short-lived, especially as wholesale petrol costs are down and should be being passed on to drivers at the pumps.

The biggest retailers are once again letting drivers down by not charging lower prices while they can. Instead, they appear to be hedging their bets to protect themselves from future increased wholesale costs.

This is why we fear a fuel duty cut by the Chancellor in the Spring Statement could be swallowed up by retailers to the detriment of hard-pressed drivers. A 5p per litre reduction in duty would only save around 6p per litre after VAT but that could be absorbed by retailers. A 5% reduction in the VAT at the end of a transaction would save drivers around 7-8p per litre and be much fairer for them.”

How to Lower Business Fuel Costs

Whilst fuel prices continue to rise, it’s absolutely crucial for businesses to reduce their fuel consumption wherever possible in order to keep operating costs down.

One of the most effective ways to do this is by implementing vehicle tracking devices in your fleet vehicles. Here’s how fleet vehicle tracking could help cut your fuel costs.

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Monitor Driving Styles

Did you know that driving style can have a significant impact on the amount of petrol or diesel a vehicle consumes? According to the Energy Saving Trust, through higher productivity and increased vehicle utilisation, operating costs can fall by 10% every year and fuel use by 15%!

Fortunately, fleet tracking is an incredibly useful tool that allows you to get a full picture of your fleet vehicles at any given time, including real-time GPS updates, routing, vehicle reports and journey replay- all of which can be used to analyse driving styles and identify any inefficient driving techniques, such as where drivers are idling or being too heavy on the pedals.

With the data about your drivers’ behaviours, you can take action to provide extra training, where needed, to reduce instances such as harsh braking, setting off too quickly and speeding, all of which make your vehicles less fuel efficient.

Efficient Route Planning

Fleetsmart vehicle tracking utilises Advanced Mapping that allows fleet managers to plot specific journeys on a map, making sure their drivers are taking the quickest routes possible so that they aren’t wasting time and fuel (and therefore money) by taking longer routes.

Lowering Fuel Costs with Fleetsmart

Whether you manage 10 or 10,000 vehicles, it is essential to look out for where you can make savings within your business, starting with fuel costs. Although it may seem counterintuitive to invest in vehicle tracking when you’re trying to save money, Fleetsmart’s tracking devices are an incredibly worthwhile investment.

In fact, we would typically expect a return on investment for an average business to be within 90 days, which includes any initial payments and also covering a full year's subscription.

Fleets with a more significant potential for improvement can expect a much quicker return on investment with typical savings experienced per vehicle are £1,000-£2,000 per annum!

Reach out to our team of fleet experts today to discuss how we can help your business save money.