PRA warns new record fuel prices to be ‘eclipsed’

Brian Madderson, chairman of the Petrol Retailers Association, has warned that record pump prices are almost certain to be eclipsed before the end of October. The current record prices of 142ppl for petrol and 148ppl for diesel were set in April 2012. Experian Catalist UK averages for 19 October were 141.35ppl and 144.84ppl respectively.

The primary reason is the rise and rise of crude oil costs which recently hit $US 85/barrel for Brent Crude. This involves more than a 50 per cent increase since January 2021 and has been caused by a cutback in production from OPEC countries and Russia at the same time as the global economies are staging a rapid economic turnround from the global pandemic. There is no immediate sign of a change to this position and some analysts have talked about further oil price rises to $US100/barrel by Christmas.

Current average pump prices across the UK are being softened by some of the largest retailers who typically benefit from a 3 or even 4-week lag to their delivered fuel prices. Only last week, two major grocery retailers in Belfast were vying for business by offering fuel at below standard wholesale cost with pump prices as low as 125.9ppl for petrol and 130.9ppl for diesel.

Another less obvious reason for the wholesale price increase relates to the production profile obtaining in Western Europe

S&P Global Platts advised PRA: “Physical spot market activity has seen Gasoline and diesel rise in tandem with the wider energy complex, and this has a knock-on effect, boosting retail prices for road and heating fuels. Lower stock levels in Northwest Europe are tightening supply and this is accompanied by stronger demand for gasoline in the US, which is an export outlet for the European gasoline market. There’s also stronger demand in the petrochemical sector, which is attracting certain components that would be otherwise destined to gasoline blending. The picture for diesel is not dissimilar, with limited refinery output coupled with stronger demand across Europe and a boost of demand from the heating fuels lifting values across the entire gasoil complex.”