Plummeting pound ‘adds £5 to a full tank of petrol’
Drivers are paying an extra £5 for a full tank of petrol due to the fall as the value of the pound takes a dive, according to new AA analysis.
Pump price savings from the cost of oil dropping back to where it was before Russia invaded Ukraine are being “severely undermined” by the weakness of sterling, the AA said.
The pound has been plumbing new depths in recent months, and plummeted again on Friday as spooked markets reacted to Chancellor Kwasi Kwarteng's new economic measures.
The motoring organisation calculated that the price of petrol at UK forecourts would be “at least” 9p per litre cheaper if the pound had maintained its mid-February value of 1.35 US dollars, instead of this week’s level of 1.14 US dollars, which was a 37-year low.
The difference in pump prices is adding around £4.95 to the cost of filling up a typical 55-litre family car, the AA found.
Petrol averaged 164.8p per litre at the start of the week, down from 173.5p in mid-August.
But the 8.7p fall is less dramatic than the 15p reduction between mid-July and mid-August.
The average price of diesel decreased by 12.5p between mid-July and mid-August, before dropping another 3p to 181.3p at the start of the week.
Why aren't fuel prices going down?
AA fuel price spokesman Luke Bosdet explained: “The influence of the exchange rate is often overlooked when drivers compare oil price movements with those at the pump.
“At the moment, it is critical. Oil and fuel on commodity markets are traded in dollars, which makes the weaker pound very bad news for motorists.
“The price of oil is back to the level at the start of the Ukraine war but petrol is 15p a litre more expensive.
“Two-thirds of that higher cost is down to the weakness of the pound.”
Sterling has been weak against the dollar for months, largely because of the strength of the US currency.
Mr Bosdet added that it is possible to buy petrol at around 10p per litre below average prices by finding a “competitive forecourt” selling the fuel at less than 155p per litre.
In July, the Competition and Markets Authority recommended that the government should consider measures to make it easier for drivers to compare fuel prices at different forecourts to increase competition.
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