Petrol prices reach record levels - so what's behind the spike?

The rise in petrol prices is already having an impact, as Northern Reporter Sangita Lal explains

The price of petrol has risen to record levels, with the cost-of-living crisis continuing to take hold.

The cost of living in the UK is already rising at its fastest pace for almost 30 years but the worst is yet to come with even steeper energy price hikes and the National Insurance increase on the horizon.

Petrol costs are the latest to feel the squeeze, here's what's causing it.

How expensive is petrol now?

Average UK petrol prices have surpassed 148p for the first time, according to new figures.

The AA said petrol jumped to 148.02p per litre on Sunday, rising above the previous record high of 147.72p from November 21 last year.

With these prices, it would cost around £80 to fill a standard family car with a 55-litre engine.

Meanwhile, the cost of diesel has also increased to a new record high of 151.57p per litre, which it struck last week.

On Thursday, it passed the previous record set on November 20 of 151.10p a litre.

Luke Bosdet, the AA’s fuel price spokesman, said: “The cost of living crisis has been ratcheted up yet another notch, tightening the vice on family spending when it faces other pressures from impending domestic energy cost and tax increases.”

Why is everything more expensive?

Covid-19 has hit global supply chains with a combination of pent-up demand and delays to shipping as factories across the world face lockdowns and worker absences.

This has led to prices rising, particularly for raw materials.

Food prices have also risen as wages increase, including for HGV drivers, due to recent shortages and with thousands of drivers leaving the UK to return to their home countries in the EU.

Credit: Credit: Lewis Whyld PA Archive/PA Images

All of this is adding to eye-watering rises in energy bills after wholesale gas prices shot up by about 500% in 2021, as well as record costs at the petrol pumps from hikes in oil prices globally.

So, why petrol?

Prices have soared on the back of wholesale fuel prices, which have also been spurred in recent days by concerns that Russian tensions could have an impact on supply.

On Monday morning, Brent crude oil prices surged to a new seven-year high of more 95.40 US dollars per barrel.

RAC fuel spokesman Simon Williams said: “Petrol has unfortunately hit a frightening new high of 148.02p, which takes filling a 55-litre family car to an eye-watering £81.41.

“With the oil price teetering on the brink of 100 dollars a barrel and retailers keen to pass on the increase in wholesale fuel quickly, new records could now be set on a daily basis in the coming weeks.

“The oil price is rising due to tensions between Russia – the world’s third-biggest oil producer – and Ukraine, along with oil production remaining out of kilter with demand as the world emerges from the pandemic.

“As a result, drivers in the UK could be in for an even worse ride as pump prices look certain to go up even more.”

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