Blog
Pain at the Pumps
22nd May 2008
My diesel-powered Citroen has spent a pretty long time parked and unused in recent weeks. Save for occasional visits to the supermarket I have tried to use the car as little as possible as fuel prices have spiked higher and higher. At the margin, it makes much more sense for me to pay for a £14 return rail ticket from home to Oxford for a lunch engagement or a £90 return train journey to Manchester for the recent student workshops than sit sweating and increasingly stressed in the car for several hours getting from A to B.
It is only when you finally drag to the petrol station forecourts to fill up the tank that you notice just how much the price of petrol and diesel has surged this year. Today the Automobile Association reported that retail diesel prices have jumped by the largest month-on-month leap in eight years, with the price of a litre of diesel climbing 6.8 pence to 1.242 pounds a litre over the past month to mid-May. Petrol prices have risen by just under 5p per litre over the same period. The super-spike in crude oil prices is flowing through quickly from the international commodities markets through to the wholesale market and then final price facing increasingly stretched motorists.
Supermarkets continue to offer lower prices (it is claimed by some that they lower their profit margins on fuel sales as a tactic to get people to their stores) and London remains the most expensive part of the UK to buy fuel.
The start of the summer holiday season is almost upon us and several surveys have come out in recent days suggesting that motorists throughout the UK are considering cutting back on their fuel consumption. Perhaps we are getting closed to the tipping point when demand for petrol and diesel starts to become more price elastic? Are some of the train operating companies taking advantage of this change in preference by hiking up those fares that are unregulated?
The road haulage industry continues to be badly hit by the fuel price rises and it is also extremely bad news for the hard-pressed UK fishing fleet as this BBC news video reports.
The steep rise in retail petrol and diesel prices might also have prompted a rash of forecourt thefts as criminals steal petrol to order!
The Guardian
Government under pressure over fuel price rises
The AA report into higher fuel prices
BBC news
Fuel prices ‘keep cars off road’
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.