Whilst many may have been on a relaxing holiday in the past month, the fuel price has been particularly active. Rising oil prices along with a weakening pound have led to an increase in prices for both fixed weekly fuel card users and those who buy directly at the pump.
Volatility in the Brent Crude Oil Price
After sustained increases in July which saw Brent Crude rise around $10 dollars a barrel from the start to the end of the month, August saw a lower overall increase between the beginning and end of the month but with more volatility week to week, ending the month just shy of $87pb.
Part of this volatility relates to the growing uncertainty around the Chinese economy which impacts demand forecasts. Like many other countries, China experienced a growth spurt as Covid lockdowns were lifted. However, recent data shows growth stalling and a lack of perceived action by the Chinese government. China is not alone though with concerns around shrinking manufacturing input being raised across the US, Europe and Asia.
There are also concerns around supply disruptions due to Hurricane Idalia disrupting traffic from the US Gulf Coast as well as a general tightening of the market driven by Saudi Arabia and Russia. Despite this August did see an increase in oil output to over 27 million barrels but the figure is still 800,000 barrels below their current target.
Pound falls against the dollar in August
Just like the oil price, the strength of the pound against the dollar saw a sharp increase. However, this increase was short-lived. After reaching a peak of 1.31 on 13th July the pound saw sustained falls back down to 1.25 by the Bank Holiday weekend. Given that the purchase of oil is in dollars, this increased the impact of the higher oil price which has led to the eye-watering prices now being seen again at the pump.
UK fuel pump prices August 2023
By the end of August, the average pump price for petrol had topped the 150ppl mark whilst diesel reached 153ppl. The increase in the monthly average for petrol was the largest seen since July 2022 although prices remain 15% lower year on year – not much comfort when you are filling up.
The monthly average pump price for diesel was up a slightly steeper 5.9p versus 5.3p for petrol, bringing it back in line with prices seen in May. Like petrol, the pump price of diesel is down 19% year on year, but this is little consolation for those dependent on fueling up to get around.
As well as the general price increases, there are also growing calls to look at the price discrepancies between regions. The AA has raised that rural areas can be charged up to 6p more per litre,
Are retailers being more transparent with prices?
Last month, the CMA announced recommendations for a “Fuel Finder Scheme” which would force all fuel retailers to provide open-source data allowing customers to compare live prices more easily in their local area. Whilst a central scheme is unlikely to be live for several months, one retailer, Asda, has begun to publish prices online (although they are not the easiest to find!)
The spread between Platts and pump continues to fall
We’ve talked before about how the decreasing spread between the wholesale (Platts) and pump price can have fuel card customers questioning how much they pay. August continues to see this spread decrease, so fuel card users will likely see a smaller difference between their price and the pump. Despite the closing gap, fuel cards remain an effective way of managing cash flow and reducing admin.
Our revenues come from litres of fuel sold, not the total cost of fuel, so we're always keen to see lower fuel prices and ensure our customers are on the road in the most cost-efficient way possible.
We offer a wide range of fuel cards that are designed to save you time and money. Use our quick comparison tool to find out which fuel card is best for your business, or alternatively, you can contact our team at 0113 202 5110 and we can discuss your options further.