It's been over four months since the United Kingdom voted in the Brexit referendum on whether or not to stay in the European Union. We take a closer look at how the prices at the pump have changed since the country decided to leave the EU. Fuel prices change depending on a number of factors including supply, supermarket promotions and wider economic conditions. We won't be looking too in depth at these elements, but we will be looking at what has changed, and how this has come about.
Fuel Prices Before Brexit
Before the UK voted to leave the European Union, motorists around the UK had been enjoying prices at the pump closer to £1.01 per litre of unleaded, during the months January and February of 2016. Diesel was marginally cheaper than unleaded in the same period, which some of you may remember as it really wasn't that long ago! In the months leading up to the referendum, we saw prices creep slowly towards the £1.10 mark, before reaching £1.11 in the days before the vote. This was 5p cheaper than the previous year, and much cheaper than the £1.30 motorists were paying in 2014 during the same period.
What Happened After Brexit?
The value of the pound took a tumble after the UK voted to leave, leaving many economists fearful of future repercussions. The world trades oil in US dollars, the fall in the value of sterling means it costs more sterling to buy oil. This is likely to take longer to 'bed in' at the pump, however the effects are already being felt. The average price at the pump stands at around £1.16 for unleaded and £1.18 for diesel. This is a significant rise in a relatively short space of time. The last time prices rose this quickly, Chancellor George Osborne cut fuel duty by 1p. Unfortunately, the rise looks to continue as the pound maintains a weaker form.
The 14 oil-producing countries around the world make up the members of the OPEC organisation. OPEC are meeting in November to discuss cutting production, which even the talk of, has been enough to push up prices. Should production be cut, this will only mean further rises in the price UK motorists pay at the pump. The current Chancellor, Philip Hammond has some deep thought to carry out ahead of his budget next year, should he consider to tinker with fuel duty. UK motorists appear to have a bumpy road ahead if the pound remains weak, and supply of oil falls.
Added: 25 October 2016