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Petrol prices post biggest daily jump in 17 years

The price of Diesel and Unleaded Petrol fuels are displayed on a sign outside a Shell petrol station
A filling station in Newcastle-upon-Tyne on 7 June 2022. The price of petrol rose 2.23p from Monday’s 178.50p, to 180.73p a litre, meaning it will soon cost £100 to fill up a car. Photo: Paul Ellis/AFP via Getty

The average price of petrol saw its biggest daily jump in 17 years on Tuesday, rising by more than 2p a litre, as the cost of living crisis affecting UK households continues to bite.

The price rose 2.23p from Monday’s 178.50p, to 180.73p a litre, meaning it will soon cost £100 ($125) to fill up a car.

A full tank of unleaded is currently £99.40, moving ever closer to the milestone expected to be reached as soon as Thursday, according to the RAC.

Diesel also increased by nearly 1.5p to another record of 186.57p, the figures showed. Diesel drivers are already paying £102.61 to fill up a full tank of fuel.

Read more: UK on brink of recession amid warning of weakest economic growth in developed world

“These are unprecedented times in terms of the accelerating cost of forecourt fuel. Sadly, it seems we are still some way from the peak,” Simon Williams, RAC fuel spokesperson, said.

“Drivers need to brace themselves for average fuel prices rocketing to £2 a litre which would mean a fill-up would rise to an unbelievable £110.

“We strongly urge the government to take drastic action to help soften the impact for drivers from these never-before-seen pump prices."

The company added that supermarket store Asda had increased its average forecourt price by nearly 5p in a single day. It warned the move would likely spur rival supermarkets, which dominate fuel retailing, to raise their prices as well.

However, Luke Bosdet at the AA said: “Reckless speculation is leading to rip-off prices at the pump. Yesterday’s more than 2p-a-litre leap in average UK petrol prices is a huge shock and fuels concern that speculation of a £2 litre just gives the fuel trade licence to pile on extra cost and the misery.

"Like one swallow doesn’t make a summer, there is no guarantee that fuel fortunes have turned in a volatile market, but it gives some hope and undermines wild predictions of where pump prices might go."

Prices at the pump have increased on the back of rising crude oil prices (BZ=F), which is used to make petrol and diesel.

Crude was cheaper at the start of the pandemic as many businesses temporarily closed and demand for energy collapsed. However, as things returned to normal, and restrictions eased, demand increased.

Read more: UK firms' growth to 'flatline' as cost of living crisis bites

In addition to this, a weaker pound (GBPUSD=X) has also had an effect as fuel, like oil, is traded in dollars on the wholesale market which can dramatically affect the price retailers pay to buy it.

Lastly, the Ukraine war exacerbated prices as Russia is one of the world's largest oil exporters. As Russia faces sanctions, demand for oil from other producers has increased, leading to higher prices.

A string of companies are now urging the UK government to take further action, including further calls for another fuel duty reduction or a cut in VAT for fuel.

Watch: Petrol prices hit 'frightening' new record high of 177.9p a litre, figures show