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Diesel & Petrol prices may stay high for 2021

Diesel & Petrol prices may stay high for 2021

You’d think with the fall in motoring during the Lockdowns of 2020 and now, that prices would be driven down. That’s logical because of supply and demand, but the opposite is true, they keep going up!

The average price of Diesel at the pumps last week was up to 124p-a-litre, jumping from 116p-a-litre in December, and if we go back to March 2020 when all this nonsense started, it was down to 108.98ppl. Commercial diesel on your fuel cards or in bulk deliveries was of course even lower than that (if it wasn’t, give me a call).

As travel restrictions begin to lift for leisure motoring however, demand will increase and may cause Diesel & Petrol prices to sky-rocket. Or will it, as it didn’t fall when motorists couldn’t drive far, so why should it do the opposite now?

That’s because it was World demand that increased the International price of diesel to rise and not the fall in UK demand for leisure motoring. World demand in the last quarter of 2020 increased dramatically. A combination of events caused the early year low rates to climb steadily. OPEC and Russia finally started to agree reduced quotas so supply fell, China, India and some others started to re-start their Industry, so demand went up. And most recently an Ice Storm in Texas shut Refineries and Rigs to the extent that the USA had to increase imports to fill a shortfall which got the Traders very excited and that drove prices further up.

When the Lockdown ends, if it ends, we could see diesel/petrol prices rise again, perhaps to record highs of 143p-a-litre for petrol and 148p-a-litre for diesel, suggests the RAC.

Going back to the International fuel market, some analysts have predicted that this year, the price of oil could reach $80-a-barrel, while JPMorgan has indicated that in 2022, it may reach highs of $100-a-barrel, resulting in much higher petrol and diesel prices.

Now when Oil reaches those kind of levels, exploration and development of Oil fields traditionally starts again, but what about the great EV switch? Surely with lower demand that will cause those high demands and high prices to collapse, or maybe not? Now do you fancy a job as an Oil Trader?

Will fuel duty go up for Diesel & Petrol prices?

The plethora of Chancellors we’ve had to suffer since 2011 have kindly left road fuel duty fixed at 59.95ppl. This time that freeze that we’ve enjoyed may no longer be possible to sustain, with Chancellor, Rishi Sunak, saying that “We can no longer afford to do so”.

Reports suggest that fuel duty, if unfrozen, could rise by perhaps 5ppl in next month’s Budget. And as we all know when Governments arrange ‘leaks’ of this nature it’s often to prepare us for the fact of a rise so we won’t be shocked, but meekly accept it.

This faces a difficult decision as to whether to pile further burden on already hard-pressed businesses by raising fuel duty and perhaps Corporation Tax as well when market diesel prices are on the rise and profits are very much squeezed.

Is there a way to reduce this impact: In a previous Blog I suggested Freezing your diesel price with our futuresfuelcard’. Back then you’d have been paying in the low 90p level. Now it would be around £1 per litre and whilst that sounds expensive to me, if the AA & RAC are to be believed even £1 / litre may look cheap in 6 months time. Have a look at or call us on 01525 300040 for a friendly chat about the Oil Industry.

Having been in it since 1974, I’m always happy to tell you about the old days, when it was around 11ppl and how they still point at the future of our business.

Fuelcard Frank.

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