Winter of discontent as fuel prices heat up

With the average price of diesel now above £1 a litre and heating bills on the rise, Emily Dennis asks whether it will be a winter of discontent for motorists and householders in the region?With the cold snap just around the corner, many of us have turned our thoughts towards keeping our homes warm and our cars on the road.

With the average price of diesel now above £1 a litre and heating bills on the rise, Emily Dennis asks whether it will be a winter of discontent for motorists and householders in the region?

With the cold snap just around the corner, many of us have turned our thoughts towards keeping our homes warm and our cars on the road.

But last night industry experts warned the region's motorists and householders to brace themselves - not for a drop in temperatures - but for soaring fuel and heating bills.

Petrol prices are predicted to rise to record levels this winter, with a rise in fuel tax duty and record world oil prices combining to sting motorists.

A litre of diesel, which fuels around a third of UK vehicles, now costs more than a £1 a litre, according to the AA and industry researchers Catalyst, and with oil prices now above (US)$90 a barrel, analysts say it is only a matter of time before petrol prices follow suit.

Experts say the rising cost of oil will hit homeowners, with some already seeing an increase in price of between about 4p and 5p a litre since last year.

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Globally fuel prices have been pushed up by the threat of Turkish military action against Kurdish rebels in the oil fields of northern Iraq, together with increasing seasonal demand for US heating supplies.

Rod Prowse, spokesman for the Federation of Petroleum Suppliers, said there were a numbers of factors behind the rise in the price of oil. He said that a 2p duty rise in the last Budget on the price of diesel per litre, coupled with geo-political factors and a perception of demand outstripping supply had seen prices rocket.

“Oil prices in monetary terms have recently reached the highest levels ever recorded,” he said. “There has been a strong upward move on oil prices since August. People replenishing heating oil supplies this year will notice that prices are higher than last year. It has probably gone up 4 to 5 pence a litre since last year, which is a pretty sharp increase. Is the pricing going to get higher? That is the $64,000 question.”

But despite this, Mr Prowse said there is no other real cost effective alternative other than oil for heating homes, apart from gas if it is available.

He said: “If you live in a rural community it is difficult because there is no real alternative for central heating oil if you are not on the gas main. The alternatives are really oil, oil or oil. The price of gas has come down quite a lot recently, but that will probably start going up again soon. For people living in Britain where there is no gas main oil remains the most cost effective form of central heating.”

Motorists and garage owners face a similarly bleak winter ahead with fuel prices showing no signs of abating, according to experts.

Philip Dingle, an executive committee member for the Petrol Retailers' Association who runs a fuel station on the A11 at Besthorpe, said that smaller garages were finding it difficult to survive as supermarket giants are able to run their forecourts at a loss.

He said: “Retailers no longer have a profit margin, and there is nothing we can do about it. The smaller guys just cannot afford to match the supermarkets, which are doing their best to keep prices down and are deliberately selling their products at a loss. Once the smaller guys start selling at a loss they get themselves in a muddle.”

Mr Dingle said that diesel at his garage now costs £1.01p per litre and unleaded costs 99.9p. He said that in January diesel was 89.9p and unleaded was 85.9p.

He said: “In the last year something like 1,000 petrol stations have closed across the UK. The little garages just cannot afford to keep going. Hingham used to have three petrol stations, but now there are none. There also used to be more petrol stations between Norwich and Watton than there was between Norwich and London, but now they are all gone as well.”

Mr Dingle put the price increase down to several factors, including seasonal variation. He said: “Once it gets cold everybody starts buying their heating oil and the price goes up. Then before the summer we find the price drops again.”

The Petrol Retailers' Association has called on the government to postpone the fuel duty increase.

Director Ray Holloway said the increase would risk putting undue financial strain on motorists and petrol retailers.

He said: “A third tax increase in ten months will squeeze the tiny margins that petrol retailers work under further still. We already have less filling stations in the UK than in 1912, and it will not take much to push more stations out of business.

“Around 65 per cent of the price at the pump is tax. With oil prices rising, the Treasury will soon receive greater revenues than expected when the increase hits the price at the pump, so the Chancellor will be making more money anyway. Why not allow forecourt traders a little breathing room, so they can stay in business?”

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