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Falling pound means drivers are paying an extra £5 per tank of fuel

By Tom Gibson | September 26, 2022

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Although the price of oil is now back to levels seen before Russia invaded Ukraine, a weak pound means prices are staying high

Falling pound means drivers are paying an extra £5 per tank of fuel

The AA has issued warnings to say the pump price of fuel will remain high – despite the cost of oil falling – as a weak pound is undermining any savings.

The pound fell to a new 37 year low against the dollar last week as this new Liz Truss government introduced tax cuts that will give substantial savings to the ‘super rich’ but seemingly dispelled any sort of confidence from investors in the UK market.

As a result, financiers continued to back the dollar – a trend that has been consistent in recent months – meaning the price for a barrel of oil, which is paid in the US dollar, sees UK motorists ultimately get a bad deal when it comes to refuel as wholesale prices are failing to fall as low as they might if the pound was stronger.

The AA backed this up saying the price of petrol would be "at least" 9p per litre cheaper if the pound had stayed at its mid-February level of $1.35.

The difference in pump prices is adding around £4.95 to the cost of filling up a typical 55-litre family car.

The average price of petrol is at 164.8p per litre, down from 173.5p in mid-August whereas diesel dropped by 12.5p between mid-July and mid-August, before falling another 3p to 181.3p last week.

AA fuel price spokesman Luke Bosdet said: "The influence of the exchange rate is often overlooked when drivers compare oil price movements with those at the pump.

"At the moment, it is critical. Oil and fuel on commodity markets are traded in dollars, which makes the weaker pound very bad news for motorists.

"The price of oil is back to the level at the start of the Ukraine war but petrol is 15p a litre more expensive.

"Two-thirds of that higher cost is down to the weakness of the pound."

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