Drivers Face New 70p Per Litre Fuel Charges Under UK Pump Prices
Motorists across the United Kingdom are set to pay new 70p per litre charges under current forecourt prices, according to recent analysis. Fuel retailers base pump prices on the wholesale cost of petrol and diesel, but there is typically a two-week 'lag' between pump prices moving to reflect any change in the wholesale price.
This delay occurs because of the time it takes for fuel to work its way through the supply chain to the forecourt, as explained by the RAC motoring group. The total retail price paid at the pump also includes a significant amount of tax, specifically 57.95p per litre in fuel duty and 20% VAT.
Tax Burden on Fuel Costs
This means that over 60% of the price drivers pay at the pump goes directly to the Treasury. When combined with car tax and 'showroom' tax, this totals more than £40 billion annually. The 20% VAT on 58p adds nearly 12p, bringing the total to approximately 70p per litre in charges.
Prices can vary dramatically from region to region and even in towns that are only a few miles apart, the RAC adds. Sometimes fuel can be cheaper in a more rural location than in an urban one, perhaps because it happens to be closer to a fuel storage terminal or refinery.
Local Retail Dynamics and Competition
Local retail dynamics also play a crucial part in determining fuel prices. Local prices are very often driven by the presence of supermarkets keen to compete on price or an independent forecourt retailer that is determined to offer the cheapest fuel.
If local supermarkets selling fuel do not compete strongly on price, this can lead to motorists paying more. The Labour Party Government has set up a new Fuel Finder scheme with the intention of increasing competition among retailers to give drivers better value at the pumps.
Government Fuel Finder Scheme Launch
Welcoming the launch of the Government's new Fuel Finder scheme, RAC head of policy Simon Williams said: "We hope this is the start of the journey to cheaper fuel prices around the UK."
As a growing number of the country's 8,300 forecourts submit their prices on a daily basis, drivers will be able to easily find the cheapest forecourts near them using their favoured app or sat-nav. This initiative aims to enhance transparency and promote competitive pricing across the fuel retail sector.
