The massive slump in the value of the pound has meant drivers have been paying an extra £5 per tank of petrol, new analysis suggests.
But the analysis came before yesterday’s mini-budget, which was followed by another huge slump in the value of sterling, taking it to a new 37-year low.
The AA said that savings at the pump as the cost of oil dropped back to where it was before the Russian invasion of Ukraine are being ‘severely undermined’ by the weakened pound.
It estimated that petrol would be ‘at least’ 9p per litre cheaper if the pound had maintained its mid-February value of $1.35, instead of the $1.14 level seen this week, which was a 37-year low. Yesterday afternoon the pound had plummeted to less than $1.10.
The earlier difference in pump prices had been adding around £4.95 to the cost of filling up a typical 55-litre family car, the motoring organisation said.
Petrol prices were averaging 164.8p per litre at the start of the week – down from 173.5p in mid-August.
That 8.7p fall is less dramatic than the 15p reduction between mid-July and mid-August.
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Yet the comparatively lower cost still sparked a bizarre reaction from the Brazilian President during his visit to the UK for the Queen’s funeral.
Jair Bolsonaro shot a video of the price at a London forecourt and compared it disparagingly with the cost in Brazil.
Meanwhile, the average price of diesel decreased by 12.5p between mid-July and mid-August, before dropping another 3p to 181.3p at the start of the week.
AA fuel price spokesman Luke Bosdet said: ‘The influence of the exchange rate is often overlooked when drivers compare oil price movements with those at the pump.
‘At the moment, it is critical. Oil and fuel on commodity markets are traded in dollars, which makes the weaker pound very bad news for motorists.
‘The price of oil is back to the level at the start of the Ukraine war but petrol is 15p a litre more expensive.
‘Two-thirds of that higher cost is down to the weakness of the pound.’
Sterling has been weak against the dollar for months, largely because of the increased strength of the US currency – but the pound has also dropped against other currencies.
Mr Bosdet added that it is possible to buy petrol at around 10p per litre below average prices by finding a ‘competitive forecourt’.
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