The plunge in the value of the pound has left drivers paying an extra £6 for a tank of petrol, an analysis from the AA has found.
The recent fall in sterling, exacerbated by Friday’s market-spooking mini-budget, has hit hard-pressed motorists in the pocket, the motoring group said.
The AA said pump price savings from the cost of oil dropping back to where it was before Russia invaded Ukraine were being “severely undermined” as sterling has slumped to 37-year lows.
It calculated that, had the pound retained its mid-February value of about $1.35, instead of Friday’s $1.11, petrol pump prices would be at least 11p a liter cheaper or £6.05 for a 55-liter a tank.
Britons have been squeezed by record fuel prices this year as Russia’s invasion of Ukraine pushed the price of oil higher, feeding through to the pumps. However, the strength of the dollar against the pound has also contributed to the rise.
The AA’s fuel price spokesperson, Luke Bosdet, said: “The influence of the exchange rate is often overlooked when drivers compare oil price movements with those at the pump. At the moment, it is critical. Oil and fuel on commodity markets are traded in dollars, which makes the weaker pound very bad news for motorists.
“The price of oil is back to the level at the start of the Ukraine war but petroleum is more expensive. Two-thirds of that higher cost is down to the weakness of the pound.”
Petrol averaged 164.8p per liter at the start of the week, down from 173.5p in mid-August. But the 8.7p fall is less dramatic than the 15p reduction between mid-July and mid-August.
The average price of diesel decreased by 12.5p between mid-July and mid-August, before dropping another 3p to 181.3p at the start of the week.
Bosdet advised drivers to shop around for fuel, claiming they could find it for around 10p per liter below average prices at a “competitive forecourt”.
The pound lost further ground against the dollar after the AA made its analysis, falling below $1.09 for the first time since 1985.
Earlier this year the government asked the Competition and Markets Authority (CMA) to carry out a “short and focused” review into the fuel sector amid claims that petroleum retailers were profiteering.
The competition watchdog has since launched an in-depth investigation into the fuel sector after raising concerns about the margins made by refineries.
In July, the CMA recommended that the government should consider measures to make it easier for drivers to compare fuel prices at different forecourts to increase competition.
Separately on Friday, campaigners expressed disappointment that chancellor Kwasi Kwarteng did not cut fuel duty in his mini budget.
Howard Cox of FairFuelUK said: “Low income families, small businesses and the economy will continue to be crippled by high pump prices, punitive fuel duty levels and opportunistic profiteering in the fuel supply chain. Neither have been addressed by this continuing atypical Tory administration.”
Kwarteng said he was “happy to engage” with MPs on calls for a fuel duty cut.