Diesel price hits new record high: What's behind the rise?

Price rises show no sign of slowing. Credit: PA

With the cost of living continuing to spiral, there is still no respite for drivers at the pumps.

On Tuesday, 24 May, the cost of a litre of diesel hit a record high of almost £1.82 per litre, with petrol now at a near-record high of £1.67.

Those prices are up from just under £1.80 and just over £1.65 respectively a week ago and compare with £1.31 for diesel and £1.28 for petrol a year ago. Two years ago the prices were £1.12 and £1.05 respectively.

Stephen Goodwin, of haulage firm Hallam Express in Sheffield, said the company uses around 25,000 litres of fuel a week and the rising costs of diesel were being passed on to customers.

He said: "Ultimately we can't move goods without making a profit, so it's finding that fine balance. We're very conscious of what we pass on, but our customers are well aware of what costs there are, when they turn up at the pumps in their own cars. So it's about being transparent with them."

He added: "It's worrying times. It's the taxation part – it seems to be getting taken out of the industry but not put back in."

Haulage companies say they are having to pass costs on to customers. Credit: PA

Drivers' groups said the rising cost of diesel, in particular, will have a knock-on impact on prices elsewhere.

Simon Williams, of the RAC, said: "The rising prices of diesel is going to have a big effect on hauliers and all the goods and services we have in this country, because most things on the road are moved by diesel."

Why do diesel and petrol prices keep rising?

Oil prices are continuing to rise due to rising demand, exacerbated by the war in Ukraine.

With businesses cutting off ties to Russian oil, the current crisis could well get worse.

While the UK only gets around 6-8% of its crude oil from Russia and around 18% of diesel from the country, Russia is one of the world’s largest producers of oil and gas, so any disruptions to its production processes has a global impact.

Rishi Sunak described the UK's economic situation as 'extremely serious'. Credit: PA

What plans are there to help consumers?

There has been mounting political pressure in recent weeks for the Government to introduce a windfall tax on energy corporations to support customers facing soaring bills.

Earlier this week, Boris Johnson said he was "not attracted" to the idea of new taxes but said there would be further support to assist with the rising cost-of-living.

Thirty-one companies in the UK's offshore energy supply chain have written to the Prime Minister to urge against introducing a one-off additional levy on the industry.

A Treasury spokesperson said: "In March, we introduced the biggest ever cut to all fuel duty rates – worth £5 billion when taken together with the fuel duty freeze – and it will save the average UK car driver around £100, van driver around £200 and haulier over £1,500, based on average fuel consumption.

"Our £22 billion support package is supporting people navigate the months ahead – this includes 30 million people getting a £6 billion tax cut worth up to £330 a year from July, millions of households receiving up to £350 each to help with rising energy bills and a cut in the Universal Credit taper rate helping over a million families keep around an extra £1,000 a year."

The RAC wants the government to go further. Mr Williams said: "The chancellor cut fuel duty for the first time in a long time. Unfortunately much of that has been swallowed up by retailers.

"The RAC called on the government to reduce VAT - that would help drivers a lot more. 20% [in VAT] is accounting for about 30p a litre on diesel."

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