Petrol and diesel prices in the UK have peaked as a result of the Ukraine war and sanctions on Russian oil. The rise happened despite the government’s decision to reduce fuel taxes. The price of diesel had fallen by a few pence in recent weeks. But as the possibility of a Russian oil ban by European countries is looming, the price of petrol and diesel rose again on Tuesday (17 May 2022). This is unprecedented in British history. These price rises have put too much economic pressure on people.
UK Petrol and Diesel Prices Hit Record Highs
According to the Guardian, fuel prices at UK forecourts have hit record highs. The RAC said that the average pump price for petrol had a record of 167.30p set on 22 March. However, now the record has reached 167.64p a litre. The peak for diesel prices was 180.29p on Monday, 16 May 2022. However, it rose to an average of 180.90p a litre by the end of Tuesday, 17 May 2022.
Fuel Duty Cut by 5p a Litre
Which.co.uk says that, in its Spring Statement 2022, the British government announced a cut on fuel duty for petrol and diesel. Fuel duty had been frozen since 2011. The Chancellor noted on 23 Mar 2022 that this reduction was the biggest ever and only the second cut in 20 years. Fuel duty is currently stands at 57.95p per litre, so this means that it will be reduced to 52.95p per litre. The new fuel duty will stay in place for a full year, until March 2023.
In a similar statement, Car Wow said on 23 March 2022 that the UK Government has confirmed it will cut fuel duty by 5p in response to the hikes in petrol and diesel prices. Fuel duty is the tax you pay when buying petrol and diesel. The government will cut the duty to help drivers deal with financial burdens.
GOV.UK Website says the 5p cut in fuel duty will apply to the whole of the UK. This is the biggest cut, in cash terms, that has ever been applied across all fuel duty rates simultaneously. This cut, plus the freeze in fuel duty for 2022-23, represents a £5 billion saving over the next 12-months, worth around:
- £100 for the average car driver
- £200 for the average van driver
- £1,500 for the average haulier
Ban on Russian Energy
In May 2022, Vitali Klitschko, Kyiv mayor, told a group of European parliamentarians and think tankers that instability in Ukraine means instability for the whole region. He urged European nations to stop trading with Russia. Most European leaders accept that the destinies of Europe and Ukraine are inseparable. “You have to decide,” he said; “You support Russia or you support Ukraine” (Politico).
According to Aljazeera, the EU unveiled a $220bn plan to ditch Russian energy. Brussels plans to spend $314bn by 2030 to end dependence on Russian oil and gas imports. plan to end its dependence on Russian fossil fuels over a span of five years by speeding up its transition to green energy. The move comes after the start of the Russia-Ukraine war. Russia is Europe’s top gas supplier. The war has prompted the EU to rethink its energy policies amid rising concerns over supply shocks.
As Aljazeera reported, an EU ban on coal from Russia is due to start in August. The bloc has also pledged to try and reduce demand for Russian gas by two-thirds by year’s end.
Effects of the Ban on UK Petrol and Diesel Prices
A ban on Russian energy has serious consequences for Europe, including the UK. Thus some European countries have been acting very cautiously. According to reports by Aljazeera, the EU is planning to ban Russian energy. Meanwhile, the proposed EU oil embargo has hit a roadblock by Hungary and other landlocked countries. These countries worry about the cost of switching to alternative sources. The Guardian says the UK petrol and diesel prices could rise even more with a full EU ban on Russian energy imports.
Pressure on Russia or the British?
According to GOV.UK, Foreign Secretary Liz Truss has stated: “Doing business with Putin’s regime is morally bankrupt. It helps fund a war machine that is causing untold suffering across Ukraine. Cutting Russia’s access to British services will put more pressure on the Kremlin. This pressure will ultimately help ensure Putin fails in Ukraine.”
According to the New York Times, the British finance minister said sanctions on Russia were not cost-free for Britain. He added that Britain has announced measures to help people cope with inflation, including gas prices. The Guardian says consumers are facing a squeeze on household budgets. The price of food is rising and energy bills are soaring. Inflation hit 9% in April, the highest level for more than 40 years.
Final Remarks
To sum up, the UK’s ban on Russian energy would put more pressure on its people than on Russia. People in Britain will be faced with an array of problems, including the ongoing fuel crisis which can only worsen. As reported in the New York Times, the economic shock waves of the war in Ukraine are exacerbating a squeeze on household budgets in Britain. The economic shock has heightened fears of a cost-of-living crisis. Voxeu says Chancellor Rishi Sunak estimates that “banning all oil imports from Russia could cost the UK £70 billion. Low growth and high inflation are precisely the effects we would expect.
