The cost of filling a family car with diesel has reached £100, with petrol prices hitting £89, marking new post-war records as fuel costs continue to climb. These figures represent a significant increase from pre-war averages, where a fill-up cost £73 for petrol and £78 for diesel.
The surge in fuel prices is directly linked to the ongoing conflict involving Iran, which has disrupted Western oil supplies by effectively closing the Strait of Hormuz. While prices had briefly dipped following a June ceasefire announcement, the breakdown of that tentative peace deal last month has led to renewed price hikes as oil supplies have become constrained once again.
These elevated prices are impacting millions of families undertaking summer holidays and are intensifying pressure on the Labour government to reconsider its planned Fuel Duty increase. A 5 pence per litre cut in the levy, originally introduced by the Conservative party in 2022, is set to expire on January 1, with current government plans indicating a reversal of this reduction.
RAC fuel spokesman Simon Williams noted that while the cost of a full tank of diesel for a 55-litre car is once again at £100, petrol equivalent is £89, the highest since the conflict began on February 28. However, Williams expressed cautious optimism, suggesting that a recent fall in wholesale prices could translate to lower pump prices within a couple of weeks, though this remains dependent on the future course of the conflict.
Average petrol prices now stand at 161.47 pence per litre, and diesel at 181.45 pence per litre. The Treasury has reportedly collected an additional £80 million in VAT this summer alone due to these higher prices, and £920 million since the conflict began.
Opposition parties have criticized Labour's plan to increase fuel duty. Richard Holden, the Tories' shadow transport secretary, argued that the planned increase would harm businesses and families already facing financial strain. He called on the government to abandon the hike.
Industry leaders have also urged the Chancellor, John Healey, to abandon the planned increase. In a private letter, Gordon Balmer, head of the Petrol Retailers Association (PRA), warned that pump prices could remain high for months and highlighted that January and February are typically months of strained household budgets. He asked the Chancellor to scrap the planned end to the Fuel Duty cut to provide confidence to motorists and families.
Treasury sources indicated that a decision on Fuel Duty will be made before Mr. Healey's first Budget on October 28.