Comparision of Unleaded, Diesel and LPG Price trends- 28th Oct 2007

Oil prices have been on the up due to the recent market turmoil and geo-political concerns and even temporarily passed the $90 mark in October.

“Petrol Prices do not track the daily fluctuations of oil, but if we do see oil prices settle above the $80 mark then this will filter through to average petrol prices above £1 in a few weeks time”, say Jonathan Pearson, Co-founder of Whatprice.co.uk.

The last time oil was this high was around September 2006, at that time oil was averaging around $75 a barrel, and the average price of petrol reached 98p, with many forecourts around the country reaching well over the £1.

There have been reports of unleaded petrol exceeding 100p in many parts of the country. Indeed the more inaccessible areas of Wales and Scotland have suffered with prices above the pound mark for quite some time, and the average price of fuel in the Scottish Isles now stands at 102p.

The average price of Diesel has already passed £1 a few weeks ago, and even the usually cost effective LPG fuel is threatening to breach 50p a litre for the first time. The additional fuel tax of 2.35p at the start of October certainly didn't help matters. It took a couple of weeks for this to be passed onto the consumer whilst existing stocks were used up, but the price hike has fully filtered through now.

The only ray of sunshine for consumers is that forecourts DO seem reluctant to go to 100p, they tend to race up to 99.9p and then stay there for as long as possible, at least until they are in danger of making a loss (forecourts only to make 1-3p per litre on the fuel they sell). Also supermarkets are trying their hardest to keep prices down; they are typically 1-2p cheaper than the main brands.

However, unless oil suddenly drops in value it looks like we will have to get used to an extra digit on our fuel price boards!

Unleaded Petrol

It can be seen from the graph below that there is excellent correlation (with an offset due to taxes etc) between the oil and unleaded petrol price. If the price of oil starts to rise, then so does petrol. If the oil prices fall then this drop in price gets passed on to the vehicle owners.

Currently petrol is at 98.4p on average, but it is increasingly rapidly. Last month it was less than 96p, and 6 months ago it was less than 90p; back in April this year it even dipped to below 85p (at Oil at that time was only $65 a barrel- it is 30% higher now!)

Diesel

Diesel prices have followed a very similar trend in the last 12 months, but with pricing being typically even higher than Unleaded fuel.

As well as being able to buy Diesel from forecourts you are increasingly able to buy ‘bio-diesel’ as well. This comes in two forms, 5% bio-diesel is a blend of 95% normal diesel and 5% diesel made from oil from a sustainable source (e.g. vegetable oil) and 100% bio-diesel. The two should not be confused, especially since the 100% bio-diesel has a lower Fuel Duty of around 28p per litre, compared to around 50p per litre for the 5% stuff.

However 100% bio-diesel is expensive to make and so rarely costs less than normal diesel in practice.

LPG

The price of LPG has been steadily increasing since it became a more mainstream fuel. As it is taxed far less then it is in fact more sensitive to changes in oil prices. For every litre of LPG you buy you only pay just over 12p Fuel Tax.

The only fuel taxed at a lower level than LPG is red diesel, which is for use with agricultural vehicles only (not Lorries!)

Petrol, Diesel and LPG

Clearly LPG is a lot cheaper than diesel or unleaded, costing about ½ as much. However, it is less efficient per litre burnt, meaning that the total cost saving reduces to around 30%.

Petrol and Diesel

Back in August Unleaded began to really catch up with diesel prices, with there being less than a penny difference between the two, giving the unusual site of both petrol and diesel costing the same on some forecourts, compared to the usual 2p difference. In the last month diesel has started to pull away from Unleaded and has gone above £1 a litre. Unleaded is hovering below at 98p a litre.

Petrol Price Map