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Pumped up petrol prices
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As people plan to spend the summer “staycationing” in the UK in a bid to beat the recession, the cost of holidaying at home could just have increased as petrol prices hit £1 a litre in some areas. Find out how you can cut the cost of driving
Earlier this week, the AA reported that petrol had reached £1 a litre in some areas, with prices at the pumps rising 4p a litre in the past month. The price of fuel last hit £1 a litre in October 2008.
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The price of petrol appears to be defying the laws of supply and demand, according to recent research carried out by the AA. A poll of 15,000 drivers conducted last month found that 26% of drivers are using their car less in an attempt to save money.
The average price of petrol is now 99.8p – up by 16% since the beginning of the year. The rise means that the average two-car family is now spending an extra £30 a month on filling up the car.
Hindering a recovery
So if it’s not demand for petrol, what’s the cause for this unexpected price rise? “The price of oil is artificially high as speculators scurry from currencies into commodities in the hope of making a profit,” said a spokesman for the AA.
“The problem is they are gambling on what is going to happen in six months’ time, whereas the issue is what is happening now – we are in the middle of a recession and demand is low.”
With the petrol price hikes, and plans for a 2p increase in fuel duty from September, the worry is that consumers will be spending more on filling up their cars rather than returning to the high streets (where experts believe the economic recovery will begin), leading to further fears that the recession will carry on longer than first expected.
With rising unemployment and falling returns on savings, everyone is looking for ways to cut costs – and the rise in petrol prices will come as a blow for consumers whose livelihood depends on car travel.
Find out how you can cut the cost of running your car and save money.
Updated 5 June 2009
