The motorist is expected to receive an unwelcome Christmas present this year as petrol is expected to reach 110p per gallon (some Â£5 a gallon) by mid-December. Last year it cost about 87p a litre. This will make it more than 25% more expensive just when families are probably at their most cash strapped and travelling to see family and friends.
This may also have a big impact on goods for sale during the festive period, which comes just as BP announces huge profits.The latest rises are being blamed on rising oil costs and the weakness of the pound. But the FSA had a summit earlier in the year with stakeholders to discuss ‘market transparency and efficiency’. Normally for every $2 the cost of a barrel goes up the price at the pump rises by 1p. But the last time the price at the pump was at this level the cost of a barrel was $100. At the moment it is somewhere between $75-$80 a barrel. Despite the FSA it seems therefore that speculators are still dictating the price of oil, something we will probably always have to put up with. Everyone along the supply chain is in it to make money, not to provide a social service. So as long as we in the UK fork out for fuel the market will test the limits of affordability’ especially as there are generally few petrol stations in any given area.
True competition will never exist in the petrol industry until all petrol outlets have to offer fuel from at least two providers. Just like supermarkets provide different makers’ cornflakes. I wouldn’t hold your breath though.
The VAT holiday will also come to an end on January 1st 2010, which will pile more costs onto fuel for the ever suffering motorist into the New Year.