How is Brexit affecting our fuel prices?
It’s been almost five months since Britain took to the polls and decided that it would like to leave the EU. Since then, things have been pretty uncertain, but what impact is the looming Brexit having on fuel prices? Here, we find out.
Why, and how, is Brexit impacting on prices at the pump?
Britain’s decision to exit the EU has caused uncertainty in the markets, meaning the pound is currently worth less than it once was. In turn, goods imported to the UK are costing more, which goes for oil too.
In October alone, prices of petrol rose from 112p a litre to 116p by the month’s close. A similar story is evident with diesel, rising from 113p to 118p. While such figures aren’t cataclysmic, there is an evident rise, so fleet managers, drivers and business owners have the right to be concerned, especially as an average full tank is now costing £64.20 according to RAC.
What other factors are at play?
For a long time, worldwide oil prices have been very low, but these are beginning to creep back up. Inflation is expected throughout the economy, thanks to Brexit, meaning rises in prices may be just around the corner. Not only that, OPEC (Organisations of the Petroleum Exporting Countries) is thought to be cutting production later this month which will, if it comes into fruition, boost oil prices. On the flip side, retailers may look to cut forecourt prices to save drivers money and compete at the pumps. Like Britain’s exit from the EU, the future of fuel prices is still uncertain.
Should we be concerned, and expect fuel prices to continue to rise?
Business owners may be concerned about the higher costs of fuel, yet some context will alleviate these fears. As mentioned, world oil prices have been extremely low recently, and costs have been reasonable compared to past decades.
Rising oil prices would rightly be a cause for concern, however analysts are predicting a levelling out of oil costs, or possibly even a drop before the turn of the year – the ideal situation for drivers. Brexit, and Trump’s election to President in the US, on the other hand are likely to cause the pound to fluctuate for a while, having an impact on inflation and occasional hikes in fuel costs. Simply put, as long as the pound is low, fuel prices will be that little bit higher.
We can expect to see a rise in the value of the pound as the economic and political landscape settles down. Yet it is clear for now that small-scale rises in fuel, along with the price of other day-to-day items, can be expected. Brexit is certainly having an effect on the price of petrol, but other factors such as cheap crude oil prices are likely to soften the effect, meaning that the long-term picture looks considerably more stable.
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