The Cost of Fuel

The cost of fuel is uppermost in every motorist’s mind at the moment. The price seems to just keep rising and there must be a point at which some people can simply no longer afford to run their cars.

I did a long journey from the south coast of England to Edinburgh recently which cost me an arm and a leg. It would have been cheaper to go by air, until you factor in the train travel to and from my nearest airport, plus the fact there were two of us going.

I made a point of keeping a lookout for variations in the price of petrol throughout the journey, to see if there were any regional variations. I didn’t notice any geographically, but I did observe a wide spread of prices during the trip.

The lowest price I saw for unleaded petrol was 119.9p per litre and the highest was 129.9p. That’s a difference of ten pence per litre, which to me is significant. We’re all used to variations of a few pence and I saw plenty of them, but ten pence a litre? The variation was across the country – I saw both high and low prices in most regions I passed through, sometimes garages within a mile of each other being significantly different. But what was obvious was that it was consistently one brand of fuel which was more expensive than any of its rivals.

I should point out here that all the prices I checked were standard filling station prices and not supermarket ones, as I am dubious about the quality of some supermarket fuel.

So we are looking here at differences in cost from one end of the country to another among the major brands – Esso, BP, Shell and Texaco. Motorway services are notoriously more expensive and this proved to be the case, but even on ordinary ‘A’ roads, the prices fluctuated at filling stations, often with the same brand, within a few miles of one another. This can be partly explained by the fact that if there is cheap supermarket petrol available within a short distance of a standard filling station, then they try and keep their prices within about one pence per litre to remain competitive.

And the price variation I saw was not as great as the apparent spread across the country. Looking at a price comparison website the nationwide variation at the time of writing is between 116.9p and 131.9p, with the average being 121.6p. According to the AA, during April this year Yorkshire and Humberside were the cheapest places to buy petrol with Northern Ireland the most expensive.

Although part of the problem for the increase has been the rise in the cost of a barrel of oil, coupled with increases in fuel duty, the main culprit is actually the current weakness of the pound against the dollar. But this still doesn’t explain such a wide variation in pump prices for a litre of ordinary unleaded fuel.

If you take the lowest price I saw – 119.9p per litre, then a massive 57.19p of that goes in fuel duty, with another 17.86 on VAT. That leaves the product costing just 39.85p and just 5p for the retailer to cover delivery costs and make a profit. It means margins are tight and retailers will try and maximise their profits, understandably. But if you’re setting off on a long journey, check your local low prices, keep your eyes peeled long before you start to run low, and take a detour off the motorway for the best prices. With motoring costs rising all the time, we need to make savings wherever we can.