Petrol and diesel costs stay at three-year low as Reeves freezes tax

Fuel prices remain at a three-year low, according to the latest data from the RAC.

The average price of petrol at the pump is now 135.2p after the Chancellor confirmed in the Budget that fuel duty would remain frozen for another 12 months.

It also comes despite a brief oil price jump in October as tensions in the Middle East continue to mount.

At 135.2p a litre petrol is currently a third of a pence on September, the RAC Fuel Watch shows, meaning the cost of filling up a 55-litre family car is £74.40.

Diesel rose by two-thirds of a pence to 140.2p, taking the cost of filling the tank of a family car to just over £77.

Diesel in the UK is the most expensive in Europe and has been the case for the last 21 out of 27 weeks.

There are ways to keep the cost of filling a tank down, including by going to a supermarket: the average price of unleaded bought at one of the 1,487 forecourts nationwide is 132p and diesel is 136.8p.

Currently filling up at a supermarket can save drivers 3p a litre, or nearly £2 a tank.

And being a member at membership-only retailer Costco’s pays off at the pump too, with 20 Costco stores in England and Scotland selling petrol at 127p a litre and diesel at 131.7p – more than 8p less than the UK averages.

One part of the UK that’s benefiting from even lower pump prices is Northern Ireland. 

Petrol is currently averaging 130.4p and diesel 134.1p – 5p and 6p less than the UK averages for both fuels, and 2p cheaper than the average price at a supermarket.

As well as freezing fuel duty for the 15th consecutive year, the Budget revealed that the Government will begin monitoring fuel price in two months’ time.

Simon Williams, RAC head of policy, said: ‘With prices still at least 5p a litre cheaper in Northern Ireland than the UK average, it was also positive to see at the Budget that the Government aims to allow the Competition and Markets Authority to use its statutory powers to monitor competition in the road fuels retail market in just two months’ time.

‘The Government has also acknowledged, as the RAC has been advocating for some time, that ‘this function will be crucial in providing ongoing scrutiny of prices and considering whether further action may be needed to protect consumers.’

The Government’s ‘Fuel Finder’ scheme will come into force by the end of 2025, meaning every retailer must report their prices to a central database within 30 minutes of a change being made. 

During last week’s Budget the Chancellor said hiking fuel duty ‘while the cost of living remains high, and with a backdrop of global uncertainty’ would have been the ‘wrong choice for working people’.

Motoring groups welcomed the Chancellor’s announcement, with the RAC saying drivers will ‘breathe an enormous sigh of relief’ and AA president Edmund King declaring: ‘In this eve of Halloween budget, the Chancellor has conjured up a treat for drivers.’

What does the freeze of the 5p cut mean for drivers?

If Rachel Reeves had scrapped the 5p cut with immediate effect, the cost of a litre of both petrol and diesel would have increased by 6p, with a further penny added to the bill as a result in higher VAT charged on road fuels.

On the day of the Budget the average unleaded price was 135.3p. Therefore it would have theoretically jumped to 141.32p, while diesel would have risen from 140.3p to 146.3p.

This would have meant an average family car with a 55-litre fuel tank would have cost an additional £3.30 to fill up.

Over the course of a year, based on average mileage of 7,000 miles per annum, drivers could expect to have forked out an extra £48 on fuel receipts over the course of a year.

How does crude oil prices change the price of petrol? 

There industry standard is for a 1p a litre charge at the pump for every $2-a-barrel change in the price of crude oil, meaning an $20 increase will lead to a £5.50 jump in the cost of a filling a typical 55-litre fuel tank.

And retailer margins are adding more than a 6p-a-litre increase to the cost of petrol.