Diesel could hit £1.80 by September, warns expert
Record oil prices and heavy taxation blamed for fuel hike
Northern Ireland's motorists — who are already paying over 50p a litre more for fuel than they were five years ago — were today warned that diesel could hit the £1.80 mark by September.
The bad news comes as experts predict that the fuel crisis, which has been driven mainly by the rising cost of oil — now priced at nearly $140 a barrel — looks set to deepen.
New figures from the AA June Price Fuel Report show record rises in the price of both diesel and petrol, with diesel perilously close to smashing the £6 a gallon mark.
Diesel prices in Northern Ireland have risen by 8p to 131.5p, while a hike of 5.7p means the average cost of petrol now sits at 118.1p.
Speaking to the Belfast Telegraph today, Brendan McLoughlin, managing director of PetrolPrices.com, said the situation isn't likely to improve in the near future.
"We hit £1 a litre for unleaded back in November last year and prices have been rising seemingly exponentially since then," he said.
"We've now hit £6 a gallon for diesel in some parts of the UK, which is another psychological barrier, and assuming oil prices continue to rise, diesel looks set to hit £1.80 a litre by the end of September."
Just five years ago, diesel was a staggering 52.1p, or 66%, cheaper than it is now, costing 79.4p, and petrol was a substantial 41p, or 53%, less, priced at 77p on average in forecourts across the country.
Likewise, the AA Fuel Report for June 2005 reveals that drivers are now forking out 32.4p more for diesel and 21.8p more for petrol today compared with two years ago.
And, in just 12 months, diesel prices have risen by 33.8p, or 36%, while petrol costs 20.7p more — an increase of 21%.
The bleak situation that faces consumers now is a far cry away from this time last year when fuel was actually falling in price.
Between June and September 2007, the cost of diesel dropped from 97.7p a litre to 97.2p, while petrol fell from 97.4p to 97.2p — the price difference between both fuels being just 1.6p.
Today, with prices sitting at 131.5p and 118.1p respectively, motorists are now paying a staggering 13.4p more for a litre for diesel.
In other words, the cost of filling up a normal 50 litre tank can vary by almost £7, depending on the type of car that you drive.
Statistical analysis indicates that prices in Northern Ireland began to rise at an unprecedented level in March this year.
Unleaded rose from 104.6p in February to 107.5p in March, with the 2.9p a litre increase representing the highest month on month hike since November 2007, when it first broke through the £1 barrier, costing 102.5p.
Diesel, meanwhile, hit 100.1p a litre in October 2007 and cost as much as 108.7p just two months later.
Apart from February this year, when prices fell by 0.4p a litre for petrol and 0.1p for diesel, fuel costs have continued to rise relentlessly to the present day.
Oil is expensive because of geopolitical uncertainty, strong demand from the global economic boom of the past few years and speculative investment.
But that is only part of the problem, according to the director of PetrolPrices.com.
"The two main reasons for high fuel prices are record oil prices and heavy taxation," he said. "High oil prices are mostly driven by market speculators who are rushing to buy oil because the dollar is so weak.
"Oil is priced in dollars so at the moment it looks like a good investment.
"Supply uncertainties tend to push the price up too, for example conflict in oil producing regions such as Nigeria, plus closer to home the strikes at Grangemouth oil refinery and the Shell tanker driver dispute help to inflate the price.
"There is also a fear that we aren't actually capable of meeting the growing demand from places like India and China."
Mr McLaughlin also pointed to the Government's role in keeping prices high.
"Around 60% of the price of a litre of fuel is tax," he said.
"The UK fuel tax system is arguably the most punishing in Europe, and particularly bad at a time when oil prices are setting new records every week."