Pörksen: 5p fuel price jump hits rural Northumberland hardest

Pörksen: 5p per litre fuel price jump hits rural communities in Northumberland hardest

The drop in value of sterling since the EU referendum result last year is responsible for 5p of the recent increase in the cost per litre of petrol and diesel according to figures approved by an Oxford academic and endorsed by the former deputy prime minister, Nick Clegg. This rise will hit the pockets of people living in rural communities like North Northumberland particularly hard.

The 5p increase works out at £2.50 on a tank of petrol for an average-sized car, or £60 per year for the average motorist – however, it is likely that this price will go up even higher in communities that lack access to local transport infrastructure.

For hauliers, the impact of the increase in fuel prices is far even greater, adding more than £2,200 per year for the average lorry. 85% of everything we buy is carried by truck, so the increase in fuel costs will push shop prices up too.

Commenting on the figures, Julie Pörksen, Liberal Democrat Parliamentary Candidate for Berwick-upon-Tweed said:

“Local residents are raising concerns with me about increasing food and fuel prices. Now, the government’s own figures show that it is people in rural areas that will pay the price for the Tories reckless Brexit strategy. Hard Brexit is already starting to squeeze the purse strings of people all around the country.  Hard working families living in rural Britain depend on their cars to get around, particularly since the Conservatives cut vital bus routes in our communities.

“As the Government push us out of the world’s most lucrative single market down the path towards a hard Brexit, the situation is only going to get worse.  Prices will continue to rise and make life more and more difficult for rural people

“Liberal Democrats will fight against such unnecessary costs affecting the families and businesses in our community.”



The average price of a litre of petrol rose by 6.9 pence between June 2016 and April 2017. Diesel prices rose by 8.5 pence over the same period.
Weekly statistics on fuel prices published by BEI1]
  20 June 2016 1 May 2017 Increase (p) Increase (%)
Unleaded petrol (pence/litre) 111.2 118.1 6.9 6.2
Diesel (pence/litre) 112.3 120.8 8.5 7.6
Given that the rates of fuel duty and VAT remained the same over this period, all of the increase can be attributed to the change in the non-tax cost of petrol.

By comparing the change in the cost of a barrel of oil in dollars and sterling, we can see that around a third of the increase was due to the higher world price of oil, with around two-thirds due to the weaker pound.
The oil price in dollars has increased by 6.5% between June 2016 and April 2017, but for UK retailers the relevant measure will be the sterling price. The latter has risen by 20.5%[1]. We can therefore say that around third of the increase is due to the oil price rising, while the remainder - around two thirds - is due to the change in the dollar/sterling exchange rate in the wake of the referendum.
The weaker pound has therefore increased the price of a litre of petrol by just under 5 pence (6.9p x 2/3 = 4.6p). This means the cost of filling up the average car[2] has risen by just over £2.50 as a consequence of the EU referendum result (4.6 x 55 = £2.53).
Based on figures previously published[3], we know that Treasury estimates are based on an assumption that a 1p increase in the price of fuel costs the typical motorist £13.33 over 12 months. Using this model, we can estimate that the average motorist will pay an additional £61.32 over the course of a year (4.6p x 13.33).
For diesel, the increase in pump prices has been slightly higher, and the proportion of the increase that can be directly attributed to the fall in sterling is just under 6 pence (8.5 x 2/3 = 5.7p).
Based on the Treasury’s figures, we know that over the course of a year a 1p increase in the price of diesel translates into £400 per truck. This means that hauliers will pay an additional £2,280 over the course of a year (5.7 x 400).
[1] The monthly average oil price in June 2016 was $48.25 / £33.96. In April 2017 it was $51.39 / £40.90.
[2] Based on a Ford Focus with a 55 litre fuel tank, the benchmark used by the RAC. See http://www.racfoundation.org/assets/rac_foundation/content/downloadables/RACF_fuel_fact_sheet.pdf
[3] In answer to a parliamentary question in January 2013, the government stated that a reduction in price of 3p per litre would lead to a saving of £40 per year for the average motorist, or £1,200 for a typical haulier (link). We can therefore assume that an in increase of 1p per litre costs the average motorist £13.33 over the course of a year, and the average haulier £400.

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