Yahoo Finance Petrol and diesel prices: How cost of fuelling up car at the pump is rising
UK drivers are facing record petrol and diesel prices amid soaring oil prices as energy markets bear the brunt of Russia's invasion of Ukraine.
February marked the fourth month of rising fuel prices with petrol and diesel both shooting up by £4.5p a litre to new record highs, according to RAC.
Energy analysts warn prices could even reach £1.60 a litre causing yet more pain for motorists with no end in sight.
"February was undoubtedly a shocking month for drivers. A rise of 4.5p in any month is bad enough but when it takes pump prices to record levels, it’s bound to hurt households across the UK," said RAC fuel spokesman Simon Williams.
"Motorists are having to endure successive months of rising prices and, sadly, it doesn’t look as though February will be the last."
However, what do rising fuel prices mean for drivers in Britain, and what are the knock-on effects at a time of record levels of inflation and amid the cost of living crisis?
Why prices are rising
The ongoing conflict in Ukraine drove benchmark brent crude oil (BZ=F) beyond $111 (£83.26) a barrel — a rise that will inevitably filter down to motorists at the pumps.
Fuel price movements in the UK are mainly determined by the price of crude oil, and the exchange rate between sterling and the US dollar as crude is traded in dollars.
Benchmark oil prices soared above $111 a barrel on Wednesday to a multiyear high as officials warned that global energy security is under threat amid the Ukraine crisis.
Read more: What Ukraine invasion means for consumer prices in the UK
The latest run-up came after members of the International Energy Agency (IEA) agreed to release supplies from their oil reserves and despite efforts by the west to exclude oil and gas from their sanctions on Russia.
"While prices were rising due to oil production not being able to keep up with demand as life becomes more normal again, Russia’s invasion of Ukraine caused the barrel price to shoot past the $100 a barrel mark for the first time in nearly eight years making wholesale fuel far more expensive, Williams said.
Fuel is also traded in dollars like oil and the exchange rate is $1.33 to the pound meaning drivers could be looking at a steep incline in costs.
Williams added: "The sudden $10 jump in the oil price on Tuesday to $113 a barrel is likely to take the average price of petrol towards 155p a litre and diesel to 160p, particularly as it’s looking like this price isn’t just a market blip caused by the US and allies deciding to dip into the strategic oil reserve.
"If oil does stay at this level, the journey to an average unleaded price of 155p may be far too quick."
Watch: Why are gas prices rising?
The cost of fuelling your car at the pumps
The increase last month in the average price of petrol was the fastest since a new monthly record was set in October 2021 when unleaded went up £7.5p. It was also the eighth largest monthly rise on record.
Petrol prices hit a new all-time high on 27 February of £151.25p, with a litre of unleaded at £151.16p at the end of the month, up from £146.62p at the start.
Drivers of diesel cars witnessed larger pinch at the pumps, with a litre rising £4.76p to finish February at new record high of £154.75p. The increase was the seventh largest monthly increase on record and the biggest since last October.
The price growth has sparked a huge increase in costs for motorists.
This means it now costs £83.14 to fill a 55-litre family car, up £3 from the start of February and a rise of 22% over a year ago. It will cost and £85.11 to fully fill up a diesel vehicle.
Fuel cards
The RAC has warned that the "exorbitant cost" of filling up a tank could force people to cut down on non-essential journeys to save money.
But, there are a number of ways you can drive more economically as some fuel chains offer loyalty schemes that allows drivers to build up points to take money off your future purchases.
You can also save on their fuel bills by using a credit card that offers a high cashback return.
Shell (SHEL.L) consumers have access to Shell Go+, with drivers who spend £10 or more on fuel, or £2 or more in-store, earning a "visit". Users are able to claim money off their fuel purchase when they reach 10 visits.
Read more: UK petrol and diesel prices hit record high
Texaco users can receive Star Rewards, allowing drivers to get one point, worth 1p, for every litre of fuel they buy. Customers will get £5 voucher that can be spent at a variety of shops including Marks & Spencer (MKS.L) and Argos when they redeem 500 points. New members who register will also get 200 points.
Meanwhile, BP (BP.L) offers BPme rewards where user receive one point per litre of regular fuel purchased, and two points for every litre from the Ultimate range. It occasionally offers double or even triple points.
Motorists will also be able to earn points when they use BP shops or get a car wash, with each earning users one point per pound spent. You can also save up points to get items from the BP rewards catalogue, or trade them in for gift vouchers from selected partners, like Amazon (AMZN).
The scheme is available on the BPme app, where customers can monitor their spending and how many points they are collecting.
Best fuel prices
Pumping your fuel from supermarket forecourts could be cheaper than doing it at motorway service stations, so drivers are encouraged to fill their tank before embarking on a long journey.
Using certain apps such as Petrol Prices which show you the cheapest places to fill up in your area, can also reduce the cost of your fuel.
The app allows drivers to browse a map to find petrol stations in their area and click each station to view fuel prices.
The RAC called on the Treasury department to look at an emergency, temporary cut in the VAT rate levied on fuel to ease some of the burdens drivers are facing and to "better protect them" from upcoming rises.
Watch: How does inflation affect interest rates?
