£3-a-tank hit from post-referendum weaker pound
Over the past year fleets have suffered on average a
5.4p-a-litre hike in pump prices as a consequence of the post-referendum
weakening of the pound against the dollar, the latest AA Fuel Price Report
With a typical fuel tank holding 55 litres, the cost of
filling it has since the referendum (23 June, 2016) averaged £3 higher than if
sterling had retained its previous value.
For ‘white van man’, the penalty for filling an 80-litre
tank with diesel has averaged £4.25 over the past 12 months.
Petrol and diesel are traded in dollars per tonne on the
commodity market and, when converting prices to pence per litre for the UK
market, a stronger pound makes fuel cheaper at the pump and a weaker pound
makes it more expensive.
In the year leading up to the European Union referendum,
the value of the pound against the dollar averaged $1.486. In the 12 months
after, it averaged $1.269 or 14.6% less.
Re-calculating each week’s average commodity price of
petrol and diesel by using that week’s exchange rate from 12 months before, it
is possible to get an indication of the impact of the weaker pound on the cost
of petrol and diesel at the pump.
Meanwhile, two supermarket pump price battles in June
have helped to cut nearly 2p off the average cost of petrol and diesel on UK
forecourts. Petrol averages 114.66p a litre, compared to 116.36p a month ago,
while diesel averages 115.42p a litre, compared to 117.34p in mid-June.
Strong competition between the ‘big four’ supermarkets
has allowed them to recover the 4p gap between what they charge on average for
petrol and the average price among other retailers. Diesel at supermarkets
averages 4.3p a litre cheaper than at non-supermarket fuel stations.
“In the first three months of this year, supermarkets saw
their petrol sales drop by 6.2% compared to the same time the previous year.
Against a general reduction of 1.8% among all retailers, it spurred a series of
supermarket price wars in March, May and twice in June,” said Luke Bosdet, the
AA’s fuel prices spokesman.
“These have created deep and enduring price cuts among
all four of the supermarkets and, although the price of oil has risen over the
past fortnight, drivers can still find petrol at 110.9p a litre in places.”