We’re halfway through 2022, and petrol and diesel prices have hit record highs of over £2.10 per litre! So, what’s ‘fuelling’ the massive hike, and how do you, as a motorist cut back on your fuel consumption?
In this short article, we’ll cover:
- How the price of any consumer product is worked out
- What’s making petrol and diesel so expensive in 2022
- A few tips to help reduce your petrol or diesel use
How the price of any consumer product is worked out
To keep things simple, and to save you having to get a degree in economics, we’ll just cover the two main factors that determine how the price of any consumer product is worked out, whether we’re talking petrol, potatoes or peanuts.
- Supply and Demand: Simply put, supply and demand means, that if demand for a product increases, the price to the consumer should increase too, and if demand for the product decreases, the price should go down. And, in the case of petrol and diesel… one of the main reasons for the recent increase in demand, is that we’re emerging from a global pandemic, which means we’re getting back to work, and more importantly, back into our cars and vans.
- Sentiment: In short, sentiment is about the belief in what a product’s value will be in the future. If speculators believe that the price of a product is going to shoot up in the future, the price you pay as a consumer will go up in the present. This speculation seems and probably is, really unfair, but it does work the other way too, where speculators predict a sharp drop in the price of a product, causing the consumer price to go down in the present.
What’s making petrol and diesel prices so expensive in 2022?
As mentioned above, coming out the COVID19 pandemic and the inevitable increase in demand has got a lot to do with the rising cost of fuel, but, we’ve also got to add to that the conflict between Russia and Ukraine.
To stick with the UK situation… with the post-pandemic demand for oil already high before the conflict, we were extra reliant on the Russian Oil and Gas industry – the third largest hydrocarbon industry in the world. But, as the conflict between Russia and Ukraine intensified, worldwide condemnation meant Russia had heavy sanctions placed on it, causing us to rely more heavily on supplies from elsewhere, namely the US.
Problem is, that the US and other oil-producing countries were also seeing a post-pandemic increase in demand, so their prices were already inflated. Put all this together, and it’s plain to see why you’re paying a record price for fuel at the pumps.
And just to give a little more perspective… in January 2022, the price per barrel of crude oil was $76 USD, and barely two months later on 4th March 2022, the price hit $110 USD, and just a bit later, it hit $139 USD, the highest level in 14 years!
A few tips to help reduce your petrol or diesel use
Irrespective of why the price of fuel is so high at the moment, there are a few ways you could reduce your fuel use, other than simply not driving as much.
Below we’ve added a few quick tips to help you reduce your petrol or diesel use, but for a slightly more in-depth look, check out our other article ‘5 Fuel Saving Tips For Motorists’.
- Keep your tyres inflated: By having your tyres inflated to the correct pressure, you reduce the amount of work your engine needs to put in to move your vehicle.
- Don’t carry so much weight: We’re all guilty of having stuff in the boot we don’t need, so get sorting and chucking, and reduce the overall weight of your vehicle.
- Shop around: By using comparitive websites, you should be able to find the cheapest fuel in your local area, although, be aware, these sites do require you to start an account.
Source: www.investopedia.com
Stadium MK garage
If you’re looking for a car service, an MOT test, a car diagnostics test, or any other car or van service in Milton Keynes, contact Quality Car Service today.
