The Rise of Petrol Prices In the UK - Essay Example

? The Rise of Petrol Prices in the UK 4th, April, In the UK, petrol plays a major role in the economy, business, and inthe general society. Notably, we all know that in the recent times fuel prices have escalated in the world leading to economic depression. United Kingdom equally suffered the effects of rising petrol prices and trusted statistics can draw a clear picture of the fuel consumption trends in UK, rise in fuel prices in the United Kingdom, and their effects to the economy and business in UK. A rise in petroleum prices may emanate from various factors including market forces like inflation, cost of crude oil, supply and demand levels, and taxes on fuel products. Moreover, global events, low production, and security challenges may lead to increased fuel prices. Additionally, new technology that entails substitute sources of fuels and new gadgets lead to increased petrol prices. This paper seeks to highlight the statistics of rising petrol prices in the UK. Actually, the price of petrol rose by 38% between June 2007 and June 2012 as diesel prices rose by 43% in the same period in UK. This shows that in this period petrol drew fewer effects from the escalating prices as compared to diesel. This is interesting because in country that relies more on unleaded petrol, we can expect that the issues of pricing fuels would affect petrol more than diesel. More so, from 2007 to 2013, United Kingdom experienced drastic increase in average prices for unleaded petroleum. Most specifically, the BBC records that Petrol price 'may go up 4p' for motorists, families, and businesses across the UK according to motoring journalist Quentin Wilson (BBC News, 2013, p.1). The Petrol Retailers Association (PRA) notes that the wholesale costs of petrol rose by 5p per litre in a span of four weeks since Christmas. Consequently, the average retail prices of petrol rose by approximately 1p translating to a 4p per litre rise (BBC News, 2013, p.1). As a result, the PRA requests for a "full review" of the wholesale fuel market prices to reduce the dire effects of rising petrol prices on the consumers and their businesses in UK. This is interesting in that the effect of government policies seems to play a major role in the pricing of petrol in UK. More so, the rising petrol prices mostly affects the consumers and motorists hence the need for a review. We can however, deduce that the government has an ability to regulate the escalating petroleum prices. The Guardian records that Yorkshire, Humberside, and north England experience the lowest petrol prices at 137.6p a litre. However, in cities like London and Scotland, prices have hit an all-time high of 137.8p a litre (The Guardian, 2013, p.1). This is interesting as it demonstrates the variance in pricing of petrol across various cities. As such, we can deduce that price of petrol in UK varies from one city to another. Moreover, the motoring organization established that petrol prices in UK rose to an average of 138.32p a litre in February this year. This demonstrates a rise of 6.24p a litre since early January. Most specifically, petro prices rose by 1p in a span of five days. Actually, Experian Catalist puts the recent petrol price at an average of 132.83 pence a litre. As a result, the cost of fuelling a two-car family in a month with petrol rose to ?13.25 and the cost of refilling a typical 50-litre tank rose to ?3.12.Indeed, the AA president, Edmund King states that this is the third 10p-a-litre wholesale price increase in a span of11 months (The Guardian, 2013, p.1). As a result, the drivers in UK reduced petroleum consumption by 14m to1.465bn liters in January 2013. This is important in that it demonstrates that the effects of high petro prices streams down from the wholesaler to the motorists and the public. We can therefore deduce that increase in petrol prices has adverse effects on the motorists and results to reduced fuel consumption. The AA states that stock market speculators and the plunging pound are the major contributors to the rising petrol prices in UK. Notable is the fact that rising petrol prices lead to reduced economic growth and economic hardship for many UK citizens. Because of this the AA president requests the UK government to shelve the idea of increasing the fuel duty later in the year for purposes of stabilizing petrol prices and reducing the effects on motorists, mother consumers, and businesses in UK (The Guardian, 2013, p.1). This is interesting as it demonstrates the effects of tax and duty on the prices of petrol in UK. We can therefore deduce that the government can regulate fuel prices through taxes and duties. Moreover, the Office of Fair Trading confirms that it will soon launch an inquiry into the rising petrol prices and its effects on drivers, consumers, and businesses in UK. In the meantime, the price of petrol continues to rise as the blame game on who is causing this trend persists. Moreover, the increase in petrol prices varies from the urban to the rural areas. Indeed, according to the Department for Environment, Food, and Rural Affairs (Defra), in the period between July 2011 and June 2012, the price of petrol was higher in the rural areas than in the urban areas. Specifically, on average, drivers in the rural areas paid about 1.9 pence per litre above what their counterparts in the urban areas pay (Defra, 2012, p.1). Indeed, for drivers in the most sparsely populated rural areas, they had to pay 2.0 pence per litre more for diesel and 2.1 pence per litre more for unleaded petrol than their counterparts in the urban areas did. This is interesting as it manifests the aspect of location in relation to fuel pricing. We can then deduce that geographical location and population has significant influence on the price of petrol in UK. Additionally, according to this source, to fill a 15-gallon fuel tank, a typical family will need to pay ?1.27 more for petrol. However, it is clear from the source that the price of unleaded petrol was slightly lower than that of diesel in the urban areas. Nevertheless, the price of petrol varies across distinct quarters across settlement types in the period between July 2011 and June 2012. Most specifically, unleaded petrol prices fell in the period between July 2011 and September 2011 and in the period between October 2011 and December 2011. It then rose in the period between January and June 2012 (Defra, 2012, p.3). This is interesting as we notice that the price of petrol varies from one season to another according to the dynamics at the time. We can thus deduce that petrol prices are on the increase and the increase is more in the rural areas maybe because of the logistics involved. Additionally, we can deduce that where possible, drivers in the rural areas can use diesel instead of petrol to avoid the additional costs. Specifically, the AA fuel price report shows that in the last six years, there has been a considerable increase ion petrol prices in UK. Indeed, according to the report, the price of petrol rose from 89.4 pence per litre in January 2006 to 138.9 pence per litre in October 2012. Actually, the price had hit an all-time high of 140.2 pence per litre in September 2012. On the other hand, the guardian reports that the average price of unleaded petrol varied between ?1.32 a litre to ?1.42 in the period between January 2012 and October 2012 (Vial, 2012, p.1). This demonstrates a significant increase in petroleum prices in the recent times and we can deduce that if the trend continues like this, then the price of petrol is likely to raise further in UK thus drawing negative effects on the economy, business, and the public. Indeed, petroleum prices change quickly and drastically. For example, in the month of February, petrol prices change frequently over the years. Actually, in February 2007, the price was at 86.7p, 104.3p in February 2008, 90.2p in February 2009, 112.1p in February 2010, 128.7p in February 2011, 135.1p in February 2012, and 137.1p in February 2013. This equally demonstrates the rising petrol prices in UK (Fubra Limited, 2013, p.1). Moreover, according to Fagan, the cost of filling up the average family car with a 70-litre tank rose to ?97.37 in March 2013 and motorists are feeling the pinch in their pockets. He adds that according to the report of the latest Fuel Survey by the Santander 123 credit card, the cost of filling the tank of Ford Galaxy car rose to over ?100, which represents a 5.5% increase in petrol prices in a span of two months. Fagan notes that according to the Spanish bank, Dumfries and Scotland are the most expensive areas to fuel in UK as petrol prices have hot an average of 145.9 pence per litre. He however reckons that according to the Office of Fair Trading, an elimination of tax and duty would lower the cost of petrol from 136p a litre to 55pence per litre (Fagan, 2013, p.1). As such, we can deduce that tax and duty plays a major role in determining the price of petrol in UK. As such, if the government controls the taxation and duty systems, it can regulate the price of petrol in the UK. However, if this trend continues, motorists, and families will suffer most. The analysis of the statistics relating to rising fuel prices is important in that it monitors fuel prices in UK for possible reviews and compares the price of fuel in UK to other EU countries. More so, this information is important to students, academicians, and the public as it evaluates the recent and historic petrol price changes thus preparing them for possible changes. In addition, government departments, business consultants, and organizations also use this data for planning. Moreover, the EU uses this information to derive EU price statistics (Department of Energy and Climate Change, 2010, p.6). References BBC News 2013, Petrol price 'may go up 4p' as retailers urge review, 26 January 2013, Viewed 4 April 2013, < http://www.bbc.co.uk/news/business-21208524> Defra 2012, Diesel and Petrol Prices in Rural Areas in England (July 2011 to June 2012), 2012, Viewed 4 April 2013, Department of Energy and Climate Change 2010, Road Fuel Price Statistics – data sources and methodologies, 2010, Viewed 4 April 2013, Fagan, M 2013, Petrol prices: Filling a tank breaks the ?100 barrier, 28 March, 2013, Viewed 4 April 2013, Fubra Limited 2013, The Price of Fuel, 2013, Viewed 4 April 2013, The Guardian 2013, Petrol price surge adds 6.24p to a litre in a month, 2013, Viewed 4 April 2013, Vial, A 2012, ‘UK fuel price: how has it changed over time?’ The Guardian, 2012, Viewed 4 April 2013, Read More