Drivers have been affected by the rising cost of fuel since 2021, but last year saw one of the biggest increases in fuel prices on record. Many factors contributed to such an increase in price. As these issues seem to be easing, it’s time to look at what exactly caused the fuel crisis. We’ll also explore its effect on the country and whether another fuel crisis can be avoided in the future.
How Much Have Fuel Prices Risen By?
UK drivers saw a massive increase in fuel costs in 2022. The price hike in fuel costs has resulted from various factors, which have all implicated oil accessibility. Last year saw the most considerable increase in fuel prices, with costs at around 142p a litre in January and rising to over 190p a litre by July. At their peak, UK fuel prices increased by 46.8% in July 2022 compared to the previous year. Since this date, the price has steadily begun to fall.
The Link Between the Energy Crisis & High Fuel Prices
The increase in fuel prices has been an ongoing issue for the past year, and several factors have contributed to it. Fossil fuels are used to power many energy production plants and coal and other fuel sources. The continuous increase in the price of oil has made energy production more expensive. Energy companies passed this cost onto the consumer as they introduced a drastic rise in their standing charge and gas and electricity prices. Each issue began to impact the other, leaving the UK in energy and fuel crises.
What Has Caused the UK’s Current Fuel Crisis?
The current increase in fuel costs is not exclusive to the UK. It is a global issue that is affecting the majority of countries at the moment. However, many compounded problems have led to the UK facing more trouble accessing supplies and dealing with higher fuel costs than other countries. So, what has caused this crisis?
War in Ukraine
In March 2022, Russia invaded Ukraine and war broke out in the country. Russia has been demonised by NATO (North Atlantic Treaty Organisation) countries and penalised for its decision to try and take control of Ukraine with warfare. One of the ways Russia has retaliated is by cutting off their country’s most significant export, oil.
Russia is the world’s third largest oil producer and supplies 40% of Europe’s energy. The pipeline providing oil and gas to wider Europe has now been shut off, meaning these countries must get their oil from other sources. This process takes months, thus increasing the demand and the price.
As the world came out of various lockdowns due to the Coronavirus pandemic, the demand for oil suddenly went from being lower than usual to much higher than expected. People started using their cars more and began to travel out of the country again, all requiring fuel. Unfortunately, an increase in demand often means a price increase. This, as well as making up for lost profits due to lockdowns, caused prices to increase substantially.
As fuel prices steadily began to increase, most UK drivers began to head out to the cheapest fuel pumps to fill up while prices were still relatively low. This created a massive demand for fuel and even led to some petrol stations running out of unleaded petrol before they received their next delivery.
The UK’s decision to leave the EU has disrupted everyday imports and exports. The country is now exempt from EU trading laws and legislation which means the government has had to establish its own new set of trading rules. This has led to many delays and a shortage of HGV lorry drivers. All of the UK’s fuel and gas is imported, making it more difficult to access in recent years.
Switching to E10 Petroleum
Another considerable contributor to the fuel crisis is the UK government’s decision to switch from E5 petroleum to E10. The planned switch coincided with other events, which compounded to make one serious issue for the UK’s fuel supply.
The switch to E10 petrol was made in an effort to reduce the carbon emissions cars create. E10 fuel has a higher percentage of ethanol than its E5 alternative. Ethanol is a widely used biofuel produced from crops. The production method of E10 means that the amount of carbon dioxide absorbed is greater than the levels produced when the fuel is burned.
A Recent Reduction in Fuel Costs
Ever since the rapid increase in fuel costs, people have been keeping a close eye on daily price changes. In recent months, however, the average fuel price has steadily been falling, and this is due to several factors. The reduction has helped ease some of the financial worries synonymous with Christmas. Increased motoring costs are now one less thing to worry about, but what has led to such a decrease in petrol and diesel prices? Ultimately, the price for crude oil per barrel has fallen, and suppliers are now reducing the price they are charging at the pump. Also, the fuel demand surge has passed and is reaching an equilibrium.
Predicted Rise in Fuel Duty
As the price of unleaded petrol has fallen to an average of 151.16p a litre, customers can breathe a sigh of relief when they fill up their vehicles. However, this may not be for a while yet, as the UK government is set to increase fuel duty as of March 2023. Across 2022-23, fuel duty is estimated to generate £26.2 billion of revenue for the country. This will account for 2.7% of the average customer’s fuel receipt.
What is Fuel Duty?
Fuel duty is a levy placed on fuel purchases, and the rate is established in line with the type of fuel. This is not the same as VAT, however. When a customer purchases fuel, both a duty fee and VAT are incorporated into the price of the fuel. VAT is taken as a percentage of the fuel cost at the pump after fuel duty has been applied. Fuel duty creates a considerable source of revenue for the government, and it is set to increase later this year.
The Impact of the Fuel Crisis in the UK
The fuel crisis seems to have reached a head, and prices are steadily falling. Unfortunately for UK citizens, the situation has had a significant impact. Everyone was affected by the higher fuel prices including Businesses, road users and even people using public transport, as the increased cost was passed onto the consumer. The inflation of fuel prices over the last two years has meant that businesses that rely on haulage and delivering goods will be most affected. This is due to the cost of their daily operations increasing.
How Has the Fuel Crisis Affected the Courier Industry?
For those relying on fuel to run their business, the rising prices have meant that overhead costs are more expensive than ever before. Courier companies have been directly affected by the fuel crisis as they rely on petrol and diesel for their vehicles. The more expensive the fuel, the more it costs to carry out deliveries.
An added implication of the crisis was the inability to access fuel when the demand was at its highest. When people began to panic buy, petrol stations quickly ran out of supplies meaning courier businesses struggled to fill up their vehicles.
Can a Future Fuel Crisis be Avoided?
In the wake of the recent fuel crisis, it seems the UK is keen to avoid another. The implications that arose and the mass panic to fill up before the prices increased even further all contributed to the lasting impact of the crisis. So, what can be done to avoid another one?
Are Electric Vehicles the Answer?
There are many benefits to owning an electric vehicle, even more so in recent years. Not only do they run without producing any carbon emissions, but they have also been much cheaper for drivers to run. Electric car owners sat back and watched as the rest of UK road users struggled to find fuel and faced rising prices. This made many keen to switch to electric, but will this prevent a future fuel crisis?
Electricity is becoming more expensive than ever, which could be where electric cars become more of a hindrance than anything else. It is becoming costly to heat and light a property, and the additional demand for electricity to charge up a car can massively increase a household’s energy bill.
Be Smart About How You Drive
One of the most effective ways to avoid a fuel shortage in the future is to be wise with how you travel. Sharing journeys and only using your car when it is absolutely essential are best practice for the future. Not only will this reduce the demand for fuel supplies, bringing down the cost, but it also benefits the environment by reducing the amount of fossil fuel emissions. There are also ways to improve your vehicle’s efficiency such as turning the engine off when stationary and driving more economically.
Prevent Rising Costs With Grabbit & Run
Large and small e-commerce businesses have suffered greatly from the fuel crisis as their shipping costs have greatly increased. To remain competitive, companies are reluctant to pass on the additional cost to their customers and keep shipping fees low. This will cost them massive amounts of money in the long term, especially if their courier service is constantly increasing their prices to cover fuel costs.
Here at Grabbit & Run, we are committed to staying consistent with our prices. We don’t believe in hidden fees and will be upfront about how much we will charge you for our service. We won’t tie you into a contract you can’t get out of either. Our customers continue to work with us time and again because of our consistency, reliability, and transparency. The quote you receive from us will be what you pay.