Pound’s Slide Makes UK’s Petrol Crunch Even More Acute - BLOOMBERG
BY Bloomberg News,
(Bloomberg) -- A part of the UK’s soaring petrol and diesel prices is down to the nation’s slumping currency.
Record pump prices are closing in on £2 a liter (more than $8.50 per US gallon) and have even jumped above that at motorway service stations, according to the RAC motoring organization.
But with the dollar being the international oil market’s currency of choice, some of the surge has come from a depreciation in the pound.
UK petrol prices are about 4% higher now than they would have been if the dollar-pound exchange rate had remained constant since the start of the year, according to data from RAC compiled by Boomberg.
Oil prices have surged globally this year as countries emerge from Covid-19 restrictions, causing their demand to rebound at a time when producers are only drip feeding new barrels into the market.
Traders are also fretting over supply following the invasion of Ukraine by major producer Russia, whose exports are being sanctioned by the EU.
Fuel prices have gained even faster than crude oil because of a shortage of capacity in the world’s refining industry.
Only a portion of the UK’s retail fuel prices are being boosted by the exchange rate, because the government also taxes sales heavily.