Prices at the pump continue to increase
While the price of a barrel of oil has fallen, analysts are warning of more price hikes ahead.
The chances of £3 per litre of diesel pump prices are a possibility.
MPs on the Treasury Committee were told that the drop in oil prices could be a “lull before the storm”.
War on the home front
Nathan Piper, head of oil and gas research at financial services company Investec, warned of possible “continued increases in fuel prices”.
“If more stringent actions are imposed upon Russia, and five million barrels a day is truly taken out of the market, then oil prices would really have no ceiling.”
He added that diesel was particularly exposed to price rises. Half of the UK’s diesel is imported, with a third coming from Russia.
£3 per litre
Dr Amrita Sen, director of research at Energy Aspects, said that petrol prices could rise to around £2.40 a litre. She then added that diesel prices of £2.50 to £3 were “definitely in the realms of possibility”.
With this come the warnings that the UK could follow Germany in introducing rationing measures. BP and Shell have already reduced diesel wholesales to industry.
“If we need to rebuild stocks over the summer so that we have a buffer over the winter,” she told MPs on the committee. “It is industry that will need to be curtailed and that’s where the first set of rationing will have to come in.”
Piper believes the only other option was for the Government to release some of its stockpiles of petrol and crude oil. However, it would be “industry that takes the brunt of any rationing initially”.
Russia’s invasion of Ukraine has sparked oil costs to surge worldwide. Record prices being recorded at the pumps on an almost daily basis.
RAC fuel spokesman Simon Williams hopes that the peak. has been reached. He thinks that a reduction in prices should begin soon at the pumps. Though it all depends on the conflict in Ukraine and whether other oil produces can be encouraged to fill the gap left is Russian oil is boycotted. However, there seems little appetite in OPEC for a rise in oil production as they enjoy the profits from higher prices.
As an alternative, the US and its allies are looking to Venezuela and Iran. Both are currently under sanctions, but the desperation of the the allies means that a deal may be brokered to bring them in from the cold.
The thought of £3 per litre for fuel, combined with the record gas prices, could have severe effects on global economies. The cost of living is rising sharply, with inflation accelerating in all western economies. This could have severe effects on households quality of life, not to mention the profitabilityof many businesses.
Lesson prices increase
Within the driver training industry, RED Driving School has already upped its hourly rates to compensate. Their lesson price increase of £2.00 per hour, taking its average hourly rate to £34.50.
Seb Goldin, RED’s CEO says its important to “respond quickly” to protect instructors.
“We are conscious of the financial pressure placed on consumers and keen not to be seen as profiteering from the current fuel crisis, but in these inflationary times our primary concern is to protect the interests of our franchisees.”
Charlkes Moffat, chair of the ADINJC takes a similar view. He says that there really is a need to take the lead from other industries. This means making “a temporary surcharge based on the cost of fuel. So, if you teach for forty hours a week and prices have risen by £20, that’s a 50p per hour adjustment to be found somewhere”.
He adds that: “In my experience, a sense of realism and honesty in pricing goes a long way.”