BRIEFING PAPER
Number 04712, 17 March 2016
Petrol and Diesel Prices
By Noel Dempsey, David
Hough, Cassie Barton
Inside:
1. Trends in pump prices
2. Trends in pre-tax prices
3. Tax
4. International comparisons
5. Why did diesel become so
much more expensive than
petrol?
6. Reference Tables
7. Appendix I –Historical pump
prices
8. Appendix II -Prices across the
EU from the mid-1990s
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Contents
Summary
3
1.
Trends in pump prices
4
2.
2.1
Trends in pre-tax prices
Oil prices
6
6
3.
Tax
7
4.
International comparisons
10
5.
Why did diesel become so much more expensive than petrol?
Diverging trends in demand
12
13
6.
Reference Tables
14
7.
Appendix I –Historical pump prices
Retail price trends
Duty and VAT trends
16
17
18
8.
Appendix II -Prices across the EU from the mid-1990s
22
Cover page image copyright: Image is copyright free under Creative Commons CC0
3
Petrol and Diesel Prices
Summary
Between 2009 and 2012 road fuel prices increased sharply. By summer 2012 prices
reached record highs. Since then the overall trend of fuel prices has been on a sharp
downward trajectory. Between October 2014 and February 2015 petrol prices dropped
15.4% and 12.5% for diesel. Prices as of January 2016 are between a quarter and one
third lower than in June 2012. The typical retail price for petrol as of January 2016 is 101
pence per litre and 102 pence per litre for diesel.
The price increases from late 2010 were as a consequence of rising oil prices, the weaker
pound and increases in duty and VAT. Higher fuel prices since early 2011 were caused by
higher oil prices following the political unrest in the Middle East and particularly the revolt
in Libya. Increasing tension between Iran and the West pushed up oil prices again in early
2012.
The decreases in fuel prices from 2014 to present are the result of over production from
OPEC countries as well as reported slow-downs in major economies, such as China,
resulting in a reduction in demand for oil.
Typical retail price of premium unleaded petrol and diesel,
pence per litre
150
140
Petrol
130
Diesel
120
110
100
90
80
70
60
50
40
30
20
10
0
Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15
Source: Quarterly energy prices, DECC. Table 4.1.1
This note looks at trends in the price of petrol and diesel at the pump and before tax,
possible reasons for the gap in prices between the two fuels and compares prices and
taxes in different countries.
Trends in the pump and pre-tax price of road fuel and other petroleum products are given
in DECC’s Quarterly energy prices publication. The AA’s Fuel Price Reports has daily
national average prices. www.petrolprices.com gives daily average prices and local figures.
The Hydrocarbon Oils Bulletin from HMRC includes details of changes in duty rates and
revenues. The European Commission’s Oil Bulletin gives a weekly comparison of pump
and pre-tax prices of fuels across the EU. The International Energy Agency’s Monthly
Energy Prices shows trends in fuel prices for the largest OECD economies. Their Oil Market
Report gives background to changes in oil and product prices. Readers may also find the
following standard notes useful: Oil prices and Energy price rises and their impact on
demand.
Number 04712, 17 March 2016
4
1. Trends in pump prices
Table 1 in section 6
summarises monthly fuel price
data from 1989 onwards. The
chart opposite looks at trends
in pump prices over this time.
Typical retail price of premium unleaded petrol and diesel,
pence per litre
150
140
130
Petrol
Diesel
120
110
100
Trends for petrol and diesel
were broadly similar over this
period –differences are looked
at in the next section.
90
1990s
30
While there were regular peaks
and troughs, most of the
Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99
1990s was characterised by a
Source: Quarterly energy prices, DECC. Table 4.1.1
consistent long term increase
that averaged around 2.7 pence per litre each year.
80
70
60
50
40
20
10
0
Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15
2000 to 2012
Prices increased at a faster rate in late 1999 and 2000 which led to the
September 2000 fuel protests when petrol and diesel were an average
of 80.2 and 82.3 pence per litre respectively. Prices subsequently fell
back to around 75 pence per litre in 2002.
The spike that immediately followed the invasion of Iraq was short lived;
petrol and diesel prices were 76 and 78 pence per litre respectively at
the end of 2003.
Prices fell in early 2007 and February 2007 prices were broadly
consistent with the long-term price rises seen in the 1990s. However,
early 2008 saw the fastest period of price increases of recent decades
and typical retail prices at mid-July 2008 were 119.4 pence per litre for
petrol and 132.9 pence per litre for diesel. Prices fell back sharply over
the second half of 2008, but, apart from summer 2010, increased in
nearly every subsequent month of 2010.
The mid-May 2011 price of 136.7 pence for a litre of unleaded petrol
was the highest cash price ever until the March 2012 figure of 137.9
per litre.
The 141.5 pence for a litre of diesel in May 2011 was also a cash
record. It was exceeded in February 2012 and again in March 2012
when the average price was 145.1 pence per litre.
Both prices peaked in April 2012; at 141.7 and 147.8 pence per litre for
petrol and diesel respectively. Prices fell soon afterwards and
subsequent increases have been short-lived and have not yet taken
levels back to the April 2012 highs.
5
Petrol and Diesel Prices
2014 to date
From autumn 2014 to spring 2015 the price of
petrol and diesel fell sharply to the lowest levels
since 2010 driven chiefly by the drop in world oil
prices. There was a slight recovery up until the
middle of 2015 although this was followed by
another sharp decrease.
In January 2016 the price of petrol was 101.8 pence
per litre and 102.81 pence per litre for diesel.
The table opposite gives the latest weekly fuel
prices. The latest data show a stable price for petrol
over the past six weeks, whereas diesel has been
more varied.
Average UK fuel prices in the last 6 weeks
pence per litre
01 Feb 2016
08 Feb 2016
15 Feb 2016
22 Feb 2016
29 Feb 2016
07 Mar 2016
Petrol
Diesel
101.4
101.5
101.5
101.4
101.4
101.5
100.8
101.1
101.2
101.1
101.4
101.7
Source: Quarterly energy prices, DECC Table 4.1.1
Number 04712, 17 March 2016
6
2. Trends in pre-tax prices
Table 1 (in section 6) also
includes pre-tax price figures
and these are illustrated
opposite.
Pre-tax price of premium unleaded petrol and diesel,
pence per litre
65
60
Petrol
Diesel
55
50
This helps to identify the
impact of duty increases and
oil prices.
45
Again there were numerous
peaks and troughs, but the
trend in pre-tax prices of both
fuels was static or downwards
for much of the 1990s.
25
40
35
30
20
15
10
5
0
Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16
Source: Quarterly energy prices, DECC.
The increases in pump prices
(shown in the first chart) were
driven by increases in duty – the so-called road fuel duty escalator.
The lows seen in early 1999 were 9.4 pence per litre for petrol and
9.3 pence per litre for diesel. There were new record high pre-tax prices
for both fuels in each month from December 2007 to July 2008,
followed by sharp falls in late 2008.
The April 2012 pre-tax price of petrol was 60.5 pence per litre; 18%
above the July 2008 level.
The pre-tax price of diesel marginally exceeded its July 2008 high when
it reached 63.0 pence per litre in March 2012. It increased to 65.4
pence per litre in April 2012.
Pre-tax prices were relatively stable for much of 2013 before decreasing
sharply in 2014/15.
2.1 Oil prices
The chart opposite plots index
values for oil prices and the
pre-tax prices of road fuel. This
shows a general close match in
trends. Oil prices tend to be
more volatile and road fuel
prices tend to lag behind oil
price trends.
Crude oil prices are not the
only element of the pre-tax
price which also includes
refinery costs/profits, transport
and marketing. DECC does not
routinely publish data on the
breakdown between these
elements.
Index of pre-tax fuel prices and oil acquired by refineries,
2005=100
250
Petrol
Oil
Diesel
200
150
100
50
0
Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16
Source: Quarterly energy prices, DECC.
7
Petrol and Diesel Prices
3. Tax
The data in Table 1 show how the total tax take from road fuel has
changed over time.
Falling fuel prices and the fuel duty escalator saw the tax take rise
during much of the 1990s to a peak of 86% in early 1999.
The relatively small increases in duty between 2001 and 2008 and
higher oil prices saw the tax take fall to 57% (petrol) and 53% (diesel)
in July 2008. Both rates increased as prices fell in late 2008 and early
2009; petrol to 74% and diesel to 66%.
This trend was reversed –mainly due to higher prices – between 2010
and 2014. Once prices started decreasing at the end of 2014 and
through 2015 the tax take increased once again. At January 2016 tax
take was 74% for petrol and 73% for diesel.
Changes in duty rates in cash
terms are given in the first
chart opposite. Again this
clearly illustrates the increases
during the 1990s due to the
operation of the road fuel duty
escalator.
VAT is levied on the post-duty
price and hence on the duty
and the pre-tax price. Duty
rates on each fuel have been
identical or very close for the
period shown so any difference
in total VAT per litre is
connected to the pre-tax price.
Duty rates were cut or frozen
for around six years from early
2000.
The second chart opposite
plots the rate for petrol in real
terms. It shows a gradual cut in
the real rate of duty from 2000
to late 2008. By autumn 2008
duty was lower than it had
been in real terms since
autumn 1996. Subsequent
duty increases and
lower/negative levels of
inflation caused a sharp rise in
the real duty rate in 2009.
60
Main road fuel duty rates, pence per litre
Petrol
Diesel
50
60
50
40
40
30
30
20
20
10
10
0
0
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Source: Hydrocarbon oils bulletin, HMRC
70
Main petrol duty rates in real terms
pence per litre in 2012 prices
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Source: Hydrocarbon oils bulletin, HMRC; ONS series CHAW
Duty increases in 2010 and January 2011 were nearly matched by
higher inflation, so the real level remained broadly constant. The Budget
Number 04712, 17 March 2016
2011 duty cut took real rates down to early-2009 levels and the
subsequent freezing of duty has meant its real value is currently the
lowest since late-1996.
Pre-tax price increases add to the VAT on a litre of fuel. The real value of
the total tax on a litre of petrol fell by around one-sixth between
summer 2000 and summer 2007. With no duty increases since 2011 the
real value has fallen and the January 2016 level was around 9% below
mid-2011.
VAT was cut from 17.5% to 15% in the 2008 Pre-Budget Report and
petrol and diesel duty were increased by 2 pence per litre. It was
announced that: 1
…the cost of petrol and diesel will fall for private motorists who
should see no increase in the price they pay at the pump this year
from this measure.
The net effect of these changes depended on the underlying pre-tax
price of petrol and diesel as these determine VAT yield per litre. Higher
pre-tax prices increase the VAT yield and vice versa.
The net effect of the cut in VAT and 2 pence increase in duty was to
slightly increase the tax on a litre of petrol in early 2008, but as prices
increased the net effect was to cut it for the rest of the year by an
average of 0.25 pence per litre.
The net effect on diesel was a small cut for the whole year. The VAT cut
was temporary; it returned to 17.5% at the end of the year. The duty
increase was not reversed there were further increases in April and
September 2009.
Following the 2009 Budget duty rates increased by 2 pence per litre on
1 September 2009 and was announced that they would increase by a
further 1 penny a litre in real terms in each year each April from 2010 to
2013. 2 In effect a return to the fuel duty escalator, albeit one which
moves more slowly than the 1990s version.
Budget 2010 announced that the 2010 increase would be staged: one
penny increase in April, one penny in October and 0.76 pence in
January 2011. 3
The October 2010 and January 2011 increases were implemented by
the Coalition Government under plans inherited from the previous
Government. VAT increased from 17.5% to 20% on 2 January 2011. In
Budget 2011 the Chancellor announced he would abolish the fuel duty
escalator and instead cut duty by one penny per litre on 23 March. He
also announced a ‘fair fuel stabiliser’ where duty rises in line RPI
inflation when oil prices are high, but increases by RPI plus one pence
per litre when they are low for a sustained period.
In the Autumn Statement 2011 the Chancellor announced that the duty
increase that was due in January 2012 would be deferred until 1 August
1
2
3
Facing global challenges: supporting people through difficult times, Pre-Budget
Report press notice 24 November 2008, HM Treasury
Budget 2009 Building Britain’s future, HM Treasury
Budget 2010 Securing the recovery, HM Treasury
8
9
Petrol and Diesel Prices
2012. The inflation increase which was due on 1 August 2012, thought
to be worth 1.92 pence per litre, was cancelled. 4
Budget 2012 made no change to the existing plan to increase duty on
petrol and diesel by 3.02 pence per litre on 1 August 2012. However,
the Chancellor announced on 26 June 2012 that this duty increase
would be delayed again, until 1 January 2013. 5 This increase was
cancelled in the Autumn Statement 2012 and the planned 2013-14 put
back from April to September 2013. 6
Budget 2013 cancelled the September 2013 duty increase. 7 In the
Autumn Statement 2013 the Chancellor announced that fuel duty
would be frozen for the rest of the Parliament (to 2015). 8
Budget 2011 also announced the Government’s formal request to the
European Commission for rural fuel duty rebate pilot. This could cut
duty by five pence per litre in the Inner and Outer Hebrides, the
Northern Isles, the islands in the Clyde and the Isles of Scilly.
In Budget 2016, the Chancellor continued the freeze on fuel duty. 9 Fuel
duty has not been increased for around five years – the longest such
period since the late 1960s/early 1970s (during which VAT was first
levied). 10 According to Budget 2016 the average driver would will save
around £75 per year compared to if pre-2010 duty plans had been
implemented. 11
4
5
6
7
8
9
10
11
Autumn statement 2011, HM Treasury
Chancellor announces support for motorists, press notice 26 June 2012, HM
Treasury
Autumn statement 2012, HM Treasury
Budget 2013, HM Treasury
Autumn Statement 2013, HM Treasury
Budget 2016, HM Treasury
See the table in Appendix I for sources
Budget 2016, HM Treasury
Number 04712, 17 March 2016 10
4. International comparisons
Table 2 at the end of this note compares diesel and petrol prices and
taxes for all EU member states. The charts below illustrate this
information for early-March 2016.
Unleaded petrol pump prices in the EU
Diesel pump prices in the EU
07 March 2016
07 March 2016
BGR
POL
CZE
EST
LVA
HUN
LUX
LTU
ROU
AUT
ESP
CYP
CRO
SVN
SVK
BEL
IRL
DEU
FRA
FIN
GRC
GBR
MLT
SWE
PRT
DNK
ITA
NLD
taxes and duties
pre-tax price
0
25
Source: EU Oil Bulletin
50
75
100
125
150
BGR
POL
LVA
LTU
LUX
CZE
ESP
SVK
AUT
GRC
HUN
CRO
EST
SVN
ROU
DEU
BEL
FRA
CYP
NLD
IRL
PRT
DNK
FIN
ITA
MLT
SWE
GBR
taxes and duties
pre-tax price
0
25
50
Source: EU Oil Bulletin
The UK’s petrol price on 7 March 2016 was the seventh highest in the
EU. During the closing years of the 2000s the UK had moved down this
list from first place as rates of duty increased in other member states,
rising oil prices had shifted the balance from taxes to the pre-tax price
and the value of Sterling had been generally weaker against the Euro.
From 2012 onwards the UK moved back up this list in large part due to
the relative weakness of the Euro.
At the same time the UK’s diesel prices were the most expensive in the
EU. The price of diesel in the UK was clearly the highest in the EU for
many years, but the gap to the next highest countries fell substantially
over time-again due to duty increases elsewhere, higher pre-tax prices
and exchange rate movements. The Social Indicators article Road Fuel
Prices and Taxes Across the EU gives much more background on the
subject up until 2012. Appendix II to this note extends the EU time
series data.
75
100
125
150
11 Petrol and Diesel Prices
UK diesel duty rates are still
considerably higher than elsewhere
in the EU. The chart opposite gives
recent duty rates for the EU27. The
UK’s duty rate on petrol was second
highest, it had been the highest for
some years, but changes in the
exchange rate and increased duty
rates elsewhere have altered the
situation. Differences in diesel duty
rates are starker. Every other
member state had lower duty rates
for diesel; the diesel ‘discount’ was
30% or more in some countries.
The result was that the diesel duty
rate in the UK was 10.1 pence per
litre (21%) higher than any in any
other EU country and 23 pence
(71%) above the simple
(unweighted) average for the other
27 members. Higher VAT rates in
most other EU countries mean that
differences in total tax on a litre of
fuel are somewhat smaller.
EU road fuel duty rates 7 March 2016
pence per litre
LTU
LUX
Petrol
Diesel
POL
GRC
LVA
HUN
ESP
EST
CRO
CZE
SVK
AUT
DNK
ROU
CYP
BEL
PRT
DEU
MLT
SVN
NLD
FIN
IRL
FRA
SWE
ITA
GBR
February 2016 petrol prices for the
20
30
0
10
largest OECD economies 12 varied (in
Source: EU Oil Bulletin
$US) from $1.52 in Italy to $0.47 in
the US. Diesel prices were highest in
the UK at $1.44 and lowest in the US at $0.52. Pre-tax prices varied
between countries by around $0.14 per litre for petrol and $0.15
per litre for diesel.13
12
13
USA, UK, Japan, Germany, Italy, France, Spain and Canada.
Monthly Oil Price Statistics, IEA
40
50
60
Number 04712, 17 March 2016 12
5. Why did diesel become so
much more expensive than
petrol?
The current duty on diesel (57.95 pence per litre) is exactly the same as
that on petrol. Duty rates have been the same for the large majority of
the last 20 years. 14
Therefore the difference in price between petrol and diesel is not due to
tax, but is down to the difference in pre-tax prices. A number of factors
have pushed up the relative price of diesel over time, the most
important of which are thought to be the long term increase in demand
for diesel and limited refining capacity.
The price gap virtually disappeared during much of 2009, but grew
again in winter 2010/11 and in late 2011 remaining largely stable until
near the end of 2015 when the cost of diesel was less than petrol –
although this was short lived.
The earlier charts show that the underlying cost of diesel was less than
petrol in the early 1990s. It routinely became more expensive from 1999
onwards and until recently the gap had generally increased since. There
is also some evidence in the large price variations since 2001 that
compared to petrol, diesel prices are ‘sticky downwards’ –when prices
fall they do not fall as much as those of petrol.
This will be in part due to the fact that the underlying increase in diesel
prices has been greater, but also due to diesel’s seasonal fluctuations
this may also in part be because many of the large petrol price falls have
been in the winter months, when diesel prices tend to increase
(relatively).
The chart opposite plots
monthly price differentials
since January 1990. This helps
to illustrate the increase in the
scale of the price gap up to
2008. It also shows a seasonal
pattern in some years. Diesel is
a gasoil produced from the
same distillate of crude oil as
heating oil. Therefore in the
colder months when heating
oil demand increases there is
greater demand for this
product of the distillation
process and price responds to
the increase in demand.
14
Difference in the pre-tax price of diesel and petrol
-excess of diesel over petrol (pence /litre)
12
12
10
10
8
8
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
-8
Jan-90
Jan-92
Jan-94
Jan-96
Source: Quarterly energy prices, DECC
Hydrocarbon oils bulletin December 2011, HMRC
Jan-98
Jan-00
Jan-02
Jan-04
Jan-06
Jan-08
Jan-10
Jan-12
Jan-14
-8
Jan-16
13 Petrol and Diesel Prices
The seasonal pattern appears to have become stronger and/or clearer
since 2010. The seasonal pattern in price gaps can also be affected by
the increased demand for petrol, in North America particularly, during
the ‘summer driving season’.
The April to July 2008 price gaps increased when the past seasonal
pattern suggested a fall. Seasonal patterns can only explain a small part
of the increase in the price to 2008.
Diverging trends in demand
Overall trends in road fuel use
Volume of motor fuel delivered in the UK, million litres
help to explain at least some of
Petrol Diesel
the relative price changes
shown above. In the UK petrol
consumption 15 fell in each year
between 1998 and 2014, while
diesel consumption increased
in each year other than 2007
and 2008. The total drop in
petrol consumption since 1998
was 43%, while diesel
consumption rose by 49%. 16
Trends are illustrated in the
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997
chart opposite. Diesel became
Source: Digest of UK energy statistics 2013, DECC. Long term table 3.1.2.
more popular than petrol in
2005. In the early 1970s petrol
consumption was three times greater than diesel consumption.
15
16
Total quantity released for consumption
Digest of UK energy statistics, DECC
40
35
30
25
20
15
10
5
0
2000
2003
2006
2009
2012
Number 04712, 17 March 2016 14
6. Reference Tables
Table 1
Typical UK retail prices, pre-tax prices and tax take
pence per litre
Premium unleaded petrol
retail
Diesel
pre-tax % tax take
retail
pre-tax % tax take
Jan 1990
Jan 1991
Jan 1992
Jan 1993
Jan 1994
38.4
42.1
43.4
47.1
50.8
15.7
17.2
14.6
16.7
14.9
59%
59%
66%
65%
71%
39.2
43.3
43.2
47.1
51.7
16.8
15.8
14.9
17.2
16.3
57%
64%
66%
63%
68%
Jan 1995
Jan 1996
Jan 1997
Jan 1998
Jan 1999
53.4
55.9
61.1
63.1
62.9
14.2
13.3
15.1
13.5
9.5
74%
76%
75%
79%
85%
54.1
57.4
62.0
63.3
64.0
14.8
14.6
15.9
13.6
9.4
73%
75%
74%
78%
85%
Jan 2000
Jan 2001
Jan 2002
Jan 2003
Jan 2004
75.4
76.9
69.9
75.0
76.2
16.9
16.6
13.7
18.0
17.8
78%
78%
80%
76%
77%
77.8
81.6
74.7
76.4
77.9
19.0
20.7
17.7
19.2
19.2
76%
75%
76%
75%
75%
Jan 2005
Jan 2006
Jan 2007
Jan 2008
Jan 2009
79.0
88.8
86.9
103.7
86.3
20.1
28.5
25.6
37.9
22.7
75%
68%
71%
63%
74%
84.2
93.1
91.4
108.7
98.7
24.5
32.1
29.5
42.2
33.5
71%
66%
68%
61%
66%
Jan 2010
Jan 2011
Jan 2012
Jan 2013
Jan 2014
119.8
134.7
141.7
136.8
130.2
38.7
47.3
52.8
51.8
50.5
68%
65%
63%
62%
61%
121.0
141.1
147.8
141.3
138.1
40.2
51.1
59.8
58.3
57.1
67%
64%
60%
59%
59%
Jan 2015
Jan 2016
108.4
101.8
32.4
26.9
70%
74%
115.8
102.8
38.6
27.7
67%
73%
Aug 2015
Sep 2015
Oct 2015
Nov 2015
Dec 2015
Jan 2016
114.5
111.5
108.9
107.2
103.7
101.8
37.5
35.0
32.8
31.4
28.4
26.9
67%
69%
70%
71%
73%
74%
111.7
109.8
110.7
110.1
107.8
102.8
35.1
33.6
34.3
33.8
31.9
27.7
69%
69%
69%
69%
70%
73%
Source: Quarterly energy prices, DECC Table 4.1.1
15 Petrol and Diesel Prices
Table 2
Average Petrol(a) and Diesel Prices and Taxes in EU member states
07 March 2016
Petrol
Pump price
Diesel
Taxes and duties
Pre-tax
price
Pump
price
Taxes and duties
Pre-tax
price
per litre
per litre
% of pump
price
per litre
per litre
per litre
% of pump
price
per litre
BEL
BGR
CYP
CZE
DNK
£0.93
£0.70
£0.84
£0.75
£1.04
£0.64
£0.40
£0.51
£0.50
£0.69
69%
57%
61%
66%
66%
£0.29
£0.30
£0.32
£0.25
£0.35
£0.80
£0.66
£0.82
£0.72
£0.86
£0.50
£0.37
£0.49
£0.44
£0.50
63%
55%
60%
61%
58%
£0.30
£0.30
£0.33
£0.28
£0.36
DEU
GRC
ESP
EST
FRA
£0.95
£1.01
£0.84
£0.77
£0.95
£0.66
£0.71
£0.50
£0.46
£0.66
69%
71%
60%
59%
69%
£0.29
£0.29
£0.33
£0.31
£0.29
£0.79
£0.76
£0.73
£0.77
£0.80
£0.49
£0.40
£0.41
£0.43
£0.53
62%
53%
56%
56%
66%
£0.30
£0.36
£0.32
£0.34
£0.27
HUN
IRL
ITA
LVA
LTU
£0.77
£0.93
£1.06
£0.77
£0.79
£0.47
£0.64
£0.76
£0.48
£0.47
61%
69%
71%
62%
60%
£0.30
£0.28
£0.31
£0.29
£0.31
£0.76
£0.84
£0.93
£0.68
£0.68
£0.44
£0.54
£0.65
£0.39
£0.37
58%
65%
69%
57%
55%
£0.32
£0.29
£0.29
£0.29
£0.31
LUX
MLT
NLD
AUT
POL
£0.78
£1.02
£1.07
£0.80
£0.70
£0.47
£0.58
£0.79
£0.52
£0.43
61%
57%
74%
64%
61%
£0.31
£0.44
£0.28
£0.29
£0.27
£0.69
£0.94
£0.82
£0.74
£0.67
£0.36
£0.51
£0.52
£0.44
£0.39
52%
54%
64%
59%
58%
£0.33
£0.43
£0.30
£0.30
£0.28
PRT
ROU
SVK
SVN
FIN
£1.03
£0.79
£0.86
£0.86
£1.00
£0.72
£0.48
£0.59
£0.59
£0.70
70%
61%
68%
69%
70%
£0.31
£0.31
£0.28
£0.27
£0.30
£0.85
£0.78
£0.74
£0.77
£0.87
£0.52
£0.46
£0.44
£0.52
£0.55
61%
59%
59%
67%
63%
£0.33
£0.32
£0.30
£0.26
£0.32
SWE
GBR
£1.03
£1.01
£0.73
£0.75
71%
74%
£0.30
£0.27
£1.01
£1.02
£0.66
£0.75
66%
74%
£0.34
£0.27
Notes:
Prices converted to sterling on basis of exchange rates on date listed
Comparisons between countries require care because of differences in product
quality, marketing practices, market structure sales of other types of fuel.
(a) Super unleaded petrol (Euro super 95)
Source:
EU Oil Bulletin
Number 04712, 17 March 2016 16
7. Appendix I –Historical pump
prices
The first hand operated petrol pumps were introduced in Britain in
1920. Before then petrol had been sold in cans. In the subsequent 90
years there have been numerous changes in the quality/grade of petrol,
its lead and sulphur content and how its price and distribution has been
controlled. This note does not attempt to describe these changes. If
readers are interested in changes in the retail market up to the mid1960s they should look at Petrol: A Report on the Supply of Petrol to
Retailers in the United Kingdom which was produced by the Monopolies
Commission in 1965. Chapter 2 gives a description of the retail petrol
market up to that time.
Some of the major events and changes which affected petrol prices and
sales are listed below: 17
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
17
January 1921 -removal of the consumer tax on petrol
April 1928 –duty imposed on petrol
September 1939 –Petroleum Board made up of UK suppliers
became an executive body working under Government direction.
A single grade of petrol sold and rationing introduced.
1948 –Petroleum Board ends, new zonal price system introduced
and fixed prices become maximum prices.
May 1950 –rationing ends
February 1953 –branded petrol returns and is sold in two grades
December 1956 –Suez crises leads to rationing (to May 1957) and
40% increase in duty (reduced in April 1957)
1967 –star grading of petrol introduced
April to December 1974 –First ‘Oil Shock’ leads to maximum
prices for petrol set by regulation.
1974 –VAT introduced at 10%, later increased to a higher rate of
25% (to April 1976)
March 1989 – unleaded/leaded duty differential increased to 2.7
pence per litre (15%)
1993 –road fuel duty escalator introduced
September 2000 –high duty/prices lead to protests, blockades of
some refineries and widespread shortages.
November 2000 –cut in fuel duty and end of the escalator
announced
August 2008 –record oil prices lead to pump prices peaking at
120 pence per litre.
Early 2011 to 2012 –political unrest in the Middle East adds to
underlying increase in oil prices. These combine with the relatively
weak value of Sterling, increases in duty and VAT to give new
UK petrol prices (1902-2002) and diesel prices (1889-2002), Energy Institute; Petrol:
A Report on the Supply of Petrol to Retailers in the United Kingdom; Monopolies
Commission 1965
17 Petrol and Diesel Prices
•
record high cash prices in each of the first five months of 2011.
Increasing tension between Iran and the West pushes up prices in
early 2012.
Autumn 2014 to present – sharp declines in oil prices lead to
pump prices reducing to lowest levels since 2007.
The charts later on in this section and the table at the end illustrate
changes in the retail price of a litre of petrol since 1920 and changes in
its taxation. Prices were not allowed to freely float and reflect market
conditions for much of the early part of this period. They were either set
by agreement between petrol suppliers and retailers or, occasionally, set
by the Government. Prices were managed and price changes were
relatively infrequent. The figures given in the charts and tables are
meant to give a general impression over time, not a precise guide.
The data are for occasional times (general changes in prices or taxes) up
to 1973, quarterly or more frequent to 1988 and monthly thereafter.
Prices have been adjusted to 2012 levels using single annual inflation
estimates before 1948. This introduces a further element of imprecision,
especially when prices were rapidly changing in the early 1920s.
Retail price trends
The first chart on the following page gives real price trends for different
grades of petrol from 1920 onwards. These are set alongside some of
the major events related to petrol prices and sales.
April 2012 prices were higher than the 2008 peak in real terms and
above the peak which followed the lifting of price in 1974/75. They
were also very slightly above the peak during the Suez crisis. The
difference is around one percentage point which could be affected by
the adjustments for inflation. The April 2012 (and May 2011) real prices
should therefore be seen as broadly equivalent to those during the Suez
crisis when petrol was rationed and duty was increased by 40%.
The highest price on this series is the first one; April 1920. This was the
first ex-pump price and it is highly likely that then, as now, new
technology initially comes at a higher price. After this initial spike their
wider adoption and the greater economies of large storage tanks will
have helped to reduce prices.
The lowest real pump prices in recent times were in the late 1980s and
early 1990s when low oil prices were combined with cuts in duty (for
unleaded). Petrol was below 80 pence per litre (2012 prices) for much
of the time from late 1989 to early 1991 apart from a brief spike when
Iraq invaded Kuwait. There were broadly similar prices immediately
before both the ‘oil shocks’ of the 1970s and official prices for rationed
petrol after the end of second world war were lower still in real terms.
The lowest prices for the whole period were just before duty was
reintroduced in April 1928. Petrol was just over a shilling a gallon
(around 55 pence per litre in 2012 prices).
Number 04712, 17 March 2016 18
Duty and VAT trends
The real level of duty and VAT is given in the second chart. This starts in
1928 when duty was reintroduced. There are eight major periods which
can be distinguished:
•
•
•
•
•
•
•
•
Up to 1950 –generally low real levels of duty, the only exceptions
are the increases in 1931 which saw duty double in less than a
year. The real duty level fell considerably during most of the
second world war and immediately afterwards
1950 to the late 1960s –early rapid increases in duty were
maintained in real terms through much of this period. The shortlived sharp increase in duty during the Suez crisis is clear
Late 1960s to 1974 –cash value of duty is held constant, real
value falls by around 30%
1974 to 1989 –VAT introduced, duty (on its own) less than at any
time since the 1940s. Combined value of duty and VAT increased
rapidly jumps in 1974 and 1981.
1989 to 2000 –the impact of the road fuel duty escalator and, to
a lesser extent, higher VAT and oil prices, means the total tax per
litre increases by almost 90% in real terms
2000 to 2007 –falling real value due to cuts or freeze in duty.
2007 to 2011 –return of a duty escalator for the first years and an
increase in duty and VAT in 2011.
2011 to present –duty frozen or cut and no further increases in
VAT.
19 Petrol and Diesel Prices
Petrol prices since 1920
New pence per litre, earliest price in each year
Retail price
Duty
Retail price
Duty
cash
2011
prices
cash
2011
prices
VAT
rate
1970
1971
1972
1973
1974
7.2
7.5
7.7
7.7
9.2
94.4
93.4
88.9
82.5
88.5
4.9
4.9
4.9
4.9
4.9
64.5
61.8
57.2
53.1
47.4
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
1975
1976
1977
1978
1979
16.0
16.8
17.5
16.8
17.5
127.4
109.0
97.1
84.7
80.9
4.9
4.9
6.6
6.6
6.6
39.5
32.0
36.7
33.3
30.5
25.0%
12.5%
12.5%
12.5%
12.5%
18.7
19.5
40.0
40.9
40.9
0.0%
0.0%
0.0%
0.0%
0.0%
1980
1981
1982
1983
1984
26.4
29.1
35.0
36.7
40.4
103.0
100.3
108.0
107.8
112.8
8.1
10.0
13.8
15.5
16.3
31.6
34.5
42.6
45.7
45.6
15.0%
15.0%
15.0%
15.0%
15.0%
0.7
0.7
0.7
0.7
0.8
40.6
40.3
39.0
38.4
42.0
0.0%
0.0%
0.0%
0.0%
0.0%
1985
1986
1987
1988
1989
41.5
41.6
38.5
36.7
37.2
110.6
105.0
93.4
86.3
82.1
17.2
17.9
19.4
19.4
20.4
45.7
45.2
47.0
45.5
45.1
15.0%
15.0%
15.0%
15.0%
15.0%
94.0
..
85.9
..
..
0.8
..
0.8
..
..
36.0
..
30.3
..
..
0.0%
0.0%
0.0%
0.0%
0.0%
1990
1991
1992
1993
1994
38.4
42.1
43.4
47.1
50.8
77.9
78.6
77.7
83.0
87.3
17.7
19.5
22.4
23.4
28.3
36.0
36.3
40.1
41.2
48.6
15.0%
15.0%
17.5%
17.5%
17.5%
2.2
..
2.3
2.3
2.2
72.5
..
71.3
69.3
67.0
0.8
..
0.8
0.8
0.8
27.8
..
25.2
24.9
24.6
0.0%
0.0%
0.0%
0.0%
0.0%
1995
1996
1997
1998
1999
53.4
55.9
61.1
63.1
62.9
88.8
90.4
96.0
96.1
93.4
31.3
34.3
36.9
40.3
44.0
52.1
55.4
57.9
61.3
65.3
17.5%
17.5%
17.5%
17.5%
17.5%
1950
1951
1952
1953
1954
3.3
3.4
4.7
4.9
4.9
95.8
96.9
115.8
117.7
115.2
1.6
1.6
2.7
2.7
2.7
47.9
46.5
68.4
65.7
64.6
0.0%
0.0%
0.0%
0.0%
0.0%
2000
2001
2002
2003
2004
75.4
76.9
69.9
75.0
76.2
109.8
109.0
97.9
102.0
101.0
47.2
47.8
45.8
45.8
47.1
68.8
67.8
64.2
62.3
62.4
17.5%
17.5%
17.5%
17.5%
17.5%
1955
1956
1957
1958
1959
4.9
5.1
6.7
5.1
..
112.1
107.0
139.9
102.9
..
2.7
2.7
3.8
2.7
..
62.3
57.8
80.0
55.1
..
0.0%
0.0%
0.0%
0.0%
0.0%
2005
2006
2007
2008
2009
79.0
88.8
86.9
103.7
86.3
101.5
111.5
104.6
120.0
99.7
47.1
47.1
48.4
50.4
52.4
60.5
59.1
58.2
58.3
60.5
17.5%
17.5%
17.5%
17.5%
15.0%
1960
1961
1962
1963
1964
5.1
5.4
5.4
5.2
5.3
100.3
101.1
96.9
92.3
90.1
2.7
3.0
3.0
3.0
3.0
53.7
57.0
54.7
53.5
51.7
0.0%
0.0%
0.0%
0.0%
0.0%
2010
2011
2012
2013
2014
119.8
134.7
141.7
136.8
130.2
133.5
142.8
144.6
135.1
125.1
56.2
59.0
58.0
58.0
58.0
62.6
62.5
59.1
57.2
55.7
17.5%
20.0%
20.0%
20.0%
20.0%
1965
1966
1967
1968
1969
5.7
6.1
5.9
6.4
7.1
93.2
96.7
90.8
96.1
99.7
3.6
3.9
3.9
4.3
4.9
58.6
61.9
60.9
64.5
69.0
0.0%
0.0%
0.0%
0.0%
0.0%
2015
2016
108.4
101.8
103.1
95.5
58.0
58.0
55.1
54.4
20.0%
20.0%
cash
2011
prices
VAT
rate
164.7
145.1
97.6
88.7
100.2
0.5
0.0
0.0
0.0
0.0
19.2
0.0
0.0
0.0
0.0
0.0%
0.0%
0.0%
0.0%
0.0%
..
1.8
1.4
1.1
1.7
..
85.4
69.5
56.2
86.2
0.0
0.0
0.0
0.0
0.4
0.0
0.0
0.0
0.0
18.2
1930
1931
1932
1933
1934
1.5
1.3
1.8
1.6
1.6
77.0
70.7
97.6
86.9
87.0
0.4
0.4
0.7
0.7
0.7
1935
1936
1937
1938
1939
1.6
1.7
1.7
1.7
1.7
91.4
95.8
92.7
88.8
88.8
1940
1941
1942
1943
1944
2.2
..
2.3
..
..
1945
1946
1947
1948
1949
cash
2011
prices
1920
1921
1922
1923
1924
4.7
3.8
2.2
1.9
2.1
1925
1926
1927
1928
1929
Notes:
Prices are the earliest given in each year. From 1973 these are January prices, earlier figures could be for any time during the year.
Petrol was rationed from September 1939 to May 1950 and from December 1956 to May 1957 (Suez)
Maximum prices were set by regulation between April and December 1974
Higher rate VAT applied to petrol from 1975 to 1979
Prices adjusted to 2010 using HC Library Paper 03/82 Inflation: The value of the pound 1750-2002 and all-items RPI 1962; ONS series CHAW and CZBH
Grades:
No. 1, 1920 to 1938
"Pool" petrol, 1939 to 1952
Premier, 1953 to 1966
Sources:
UK petrol prices (1902-2002) and diesel prices (1889-2002), Energy Institute
Energy trends, Department of Energy, various editions
Quarterly energy prices, DECC Table 4.1.1
4 star 1967 to 1989
Premier, 1953 to 1966
Premium unleaded 1990 onwards
2000
Political unrest in the
Middle East
1990
Commodity boom followed by
start of financial crisis
1980
Start of 2nd Gulf War
1970
September 2000 fuel protests
1960
Iraqi invasion of
Kuwait/ first gulf war
1950
Second 'oil shock'
1940
Maximum prices set during
first 'oil shock'
1930
Petrol rationed
due to Suez crisis
0
1920
Petrol rationed during
and after WW2
Tax on petrol
removed
Number 04712, 17 March 2016 20
Changes in the real price of petrol and major events since 1920
pence per litre in 2012 prices
150
150
125
125
100
100
75
75
50
50
25
25
2010
0
21 Petrol and Diesel Prices
Real levels of VAT and duty on petrol
pence per litre 2012 prices
90
90
VAT
80
80
Duty
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
1928
0
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
Number 04712, 17 March 2016 22
8. Appendix II -Prices across the
EU from the mid-1990s
The Social Indicators article Road fuel prices and taxes across the EU
looks at how prices and taxes have varied over the past decade or so.
This appendix looks at earlier data on prices back to 1994. The earlier
data is important because it covers the period immediately after the fuel
duty was introduced. The UK’s average prices of petrol and diesel
became the most expensive in the EU during the late 1990s. Three
charts are included over the following pages; petrol prices in each EU
state, diesel prices in each EU state and the exchange rate. The
exchange rate is important, as the article explains, because of the size
and the timing of the shifts over this period. For instance, in the mid to
late 1990s when the fuel duty escalator increased real duty rates, the
value of Sterling weakened and the two effects both made the relative
price of UK road fuels even more expensive. From 2007 to 2009 the
value of Sterling weakened sharply against the Euro and this more than
outweighed real duty increases in the UK. The net result was that the
UK’s relative prices fell when expressed in Euros.
The most obvious shift in UK prices compared to the rest of the EU
came between summer 1996 and autumn 2000. The UK’s petrol prices
went from the cheapest in the EU15 to the most expensive by a margin
of 15-20%. UK diesel prices were the fourth most expensive in the
EU15 at the start of this period, soon became the most expensive and
were so by a margin of 40-45% at the end of this period.
Road fuel prices and taxes across the EU looks at later shifts in prices in
more detail.
All the underlying data can be found at:
http://ec.europa.eu/energy/observatory/oil/bulletin_en.htm
23 Petrol and Diesel Prices
Diesel prices in EU member states
1.80
€ /ECU per litre
1.60
UK
Other member states
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Petrol prices in EU member states
1.80
€ /ECU per litre
UK
Other member states
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Number 04712, 17 March 2016 24
2.00
Exchange rate €/£
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
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