The RAC said the average price of petrol jumped to £1.51 a litre on the Sunday following the attack, while diesel increased to £1.55.
Petrol price movements in the UK are mainly determined by the price of crude oil, and the exchange rate between the dollar and the pound, because fuel, like oil is traded in dollars.
Although the UK imports just 6% of its crude oil from Russia, it would still be affected by global wholesale prices rising.
Oil consumption was reduced during 2020 because of the COVID-19 pandemic. Low consumption kept the price of Brent oil low. However, in 2021, as the economy picked up, prices went from $54 to $78 by the year end.
In January prices rose to $85. If Brent is at $100, we can expect to see pump prices at around 158.5ppl (VAT inclusive).
Inevitable increases
Speaking about the news in Ukraine, Road Haulage Association (RHA) Logistics Development Manager, Nick Deal said: “It is simply a one-way street at present as prices goes up – and it is difficult to be certain how much they will increase in the current circumstances.
“Also, this situation adds to inflationary pressures. It also provides added impetus to stopping the red diesel tax change, which we are campaigning for in the March Budget.”
Impact of red diesel allowance removal
Many operators using red diesel face higher costs from April when allowances are removed. Logistics, construction, plant, and waste sectors will all lose the entitlement to use the rebated fuel.
Biofuel element
The situation in Ukraine isn’t the only reason for the price rise at the pumps. There is added cost from the increasing proportion of biofuel in the calculation of a litre of fuel.
The Renewable Transport Fuel Obligation (RTFO) details what percentage of a litre of fuel needs to be produced from renewable sources (biofuel). In 2021, the bio element was calculated using a figure of 9.93%, but from 1 January this is now 11.72%.
Until 2032, the bio element (for calculation purposes) will keep growing each year.