Data from the RAC’s two-week Fuel Watch forecast indicates the price per barrel of oil has reached above $70, spelling difficult times ahead at the petrol pump in 2018.
The average price of unleaded petrol and diesel have risen from lows of 114.33p and 115.02p respectively since 2017. This marks the first time that prices have gone beyond $70 for three years, with the last equivalent value (of $70.22) recorded on December 3, 2014.
OPEC (the Organization of the Petroleum Exporting Countries) was responsible for that previous peak, overproducing oil as a means of lowering the price per barrel and reducing the competitive viability of fracking in the United States.
Motorists enjoyed gradually falling pump prices from 2014 until early 2016, with some retailers selling both petrol and diesel for less than £1 per litre.
Since November, however, petrol prices have increased by nearly 5p per litre. Average prices of both petrol and diesel have also increased by a penny since the Christmas period. A typical 55-litre family car now costs at least £66.69 to fill with petrol, and £68.18 with diesel.
Now the RAC is predicting further rises in wholesale fuel prices. The Fuel Watch forecast currently offers a relatively stable picture of the coming months. However, if prices above £70 become the new norm for 2018, and without a substantial strengthening of the pound, this is likely to have a negative effect on consumers at petrol stations nationwide.
Simon Williams, RAC fuel spokesman, said: “If oil stays at this level, pump price hikes will be almost inevitable. With households across the country still feeling the cost of Christmas this is not the start to 2018 anyone would have wanted. It could also negatively affect business and further fuel inflation.
“Looking at the global oil picture it seems as if the glut of oil stocks is disappearing due to the production cuts imposed by OPEC along with non-member Russia as the United States’ crude oil inventories have fallen for eight weeks in a row. The US is now producing far more from fracking but this isn’t filling the gap from the OPEC cuts.
“If, however, the US’s fracking production increases substantially there is a hope that the price of oil may fall back and settle at the mid-$60 a barrel mark. This would, of course, be far better news for UK motorists.”