Price Of Oil Tumbles By 10% But Fuel Costs Still Remain High
Since March, the UK haulage market has felt the pain of soaring fuel costs. Driven by the surge in the price of oil, propelled by global factors such as the war in Ukraine as well as increased global demand.
Brent crude fell below $100 a barrel on Tuesday with fears mounting of a global recession and concerns over reduced demand. It is also a further reaction to world central banks raising interest rates to curb spiking inflation.
Meanwhile, in the UK – moderate reductions in the price of fuel have been seen, but not in-line with the reductions seen in the cost of oil. Why is this? There is always at least a 2-week lag in between the prices of oil and how the fuel market reacts. Further to this there has been recent concern that oil refineries have increased their margins from roughly 10% per litre to some 35%.
The UKs competition and markets authority recently launched an investigation to understand what is happening. This investigation was launched on the back of the earlier inquiry in whether fuel retailers had passed on the 5ppl reduction in fuel duty to consumers. According to the government through the analysis of the report the reduction was “on the whole” passed onto consumers.
Nevertheless, there is a large level of uncertainty regarding what will happen next. Its probable prices will reduce from the record highs, but it remains to be seen by how much.
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