Fuel prices have been seen to increase particularly sharply due to the price increase for crude oil. Crude oil is one of the key components in the production of both petrol and diesel.
Hugo Mitchel of ProperFinance.co.uk commented: “As petrol and oil prices continue to rise, the squeeze on people’s finances will continue, with costs of things like transport of goods passed on to consumers. Hopefully, interest rate rises can get a grip on what may otherwise be a very difficult time for many.”
During the beginning of the pandemic, there was a decreased demand for fuel and energy due to isolation taking place on a global scale. Less need to travel and increased ‘work from home’ policies coinciding with many people losing their jobs meant that the demand for energy massively decreased.
Towards the end of the pandemic, the demand for energy increased again as people all over the world are looking to return to their previous lives. With the increased demand for energy, suppliers are struggling with their production, and this has therefore led to an increase in fuel prices.
When do petrol prices change?
Petrol prices typically change alongside the price of crude oil. In spite of this, if the price of crude oil were to decrease, this does not mean that petrol providers would necessarily alter the price of their products to reflect this.
There have been many instances where the price of crude oil has decreased slightly and petrol production companies have been accused of not reflecting this in their fuel prices.
In addition to this, fuel companies may refrain from altering their prices as the global market stabilises due to the fact that they want to cover their losses from the pandemic.
During the Covid-19 period, many companies lost a lot of profit in spite of their supply remaining the same due to the lack of worldwide travel. Now that travel is permitted to most countries again, fuel companies are looking to make back some of their money and therefore the fuel prices which have increased are not set to be reduced any time soon, leading more people to turn towards quick short term loans to cover their fuel and living costs on a month to month basis..
Has the war in Ukraine had an impact on fuel prices?
Fuel prices were already on the rise prior to the beginning of the war in Ukraine, which began in February. Despite this, Russia’s invasion of Ukraine has worsened this situation on a global scale, meaning that the repercussions of the war are being felt worldwide.
This is due to the fact that Russia is considered to be one of the largest oil exporters on a global scale, however sanctions are now set to be introduced.
Russian oil imports are now not being accepted in the US, with a total ban in place. Alongside this, UK is set to phase out imports of oil which is coming from Russia by January 2023, and leaders of the EU have also stated that they hope to do the same and ban the imports by the end of the year.
The lack of oil being imported from Russia has led to an increased demand for oil from Russia’s competitors. This is a level of demand which other providers are not used to, and has therefore caused the prices to rise as companies furiously try to keep up with levels of demand.
