The price of a litre of petrol is ‘certain’ to cost £2 in 2022 and add at least £20 to the cost of filling up a family car, retailers warned today.
Russia’s invasion of Ukraine and Putin’s grip on Europe’s fossil fuel market has seen market experts predict that the cost of a barrel of oil could reach $130 by June.
There was already panic for consumers yesterday when the price smashed through the $100 mark as the invasion began – and retailers said that drivers will be forced to pick up the cost at a time when the cost of living crisis is already punishing millions.
The average price of a litre of petrol hit 150p yesterday – but some are predicting another 50p could be added as oil jumps up and the pound weakens, which the RAC called ‘the worst possible combination for drivers’.
Today on the A1 in Peterborough a Shell garage was charging £1 66p a litre for diesel, a common scene up and down the country.
At one rural garage in Suffolk boss Howard Watts said: ‘Fuel prices are set to go through the roof – and everyone will feel the effects. Prices have gone up by at least 10p a litre in many outlets and it will lead to hardship for the people living outside towns and cities who rely on their cars. But this is just the start – it is almost certain to reach £2 a litre when it will really hit people who need their cars to live and work.’
The AA and RAC also predict rises.
RAC fuel spokesman Simon Williams said: ‘The average price of both petrol and diesel rose to new record heights for the fourth time this week. Unleaded moved ever closer to the grim milestone of £1.50 a litre at 149.67p yesterday while diesel has now topped £1.53 for the first time ever.
‘Sadly, more increases are on the way as a result of oil hitting $106 a barrel and the pound weakening, making wholesale fuel more expensive to buy for retailers in the UK. This is the worst possible combination for drivers as it will push already rising prices higher still and worsen the cost of living crisis. Drivers need to brace themselves for what’s to come, with many on lower incomes having to make difficult choices as a result of needing to put fuel in their cars.’
Average household energy bills are set to hit £3,000 this year, experts warned last night.
Britons are braced for the price of gas, electricity, petrol, holidays and even a loaf bread to soar as the invasion of Ukraine tightens the squeeze on the cost of living.
One immediate effect was for stock markets in London and the rest of the world to fall – knocking a big hole in people’s pensions and savings.
The FTSE 100 index has suffered its biggest one-day fall since June 2020, wiping £90billion off the value of the UK’s biggest listed companies.
Any prolonged impact on the financial markets will also affect British pensions, as most pension funds invest primarily in stocks and bonds.
The Centre for Economics and Business Research think tank has warned the crisis could also fuel inflation.
Russia and Ukraine export more than a quarter of world wheat and 80 per cent of sunflower seeds, used for cooking oil.
Ukraine’s government said tanks and troops rolled across the border on Thursday morning in what it called a ‘full-scale war’ that could rewrite the geopolitical order of the world.
The move saw one economist predict that, if the jumps in oil, gas and electricity products on Thursday are sustained, it could push inflation to 8.2 per cent in April – and would only fall back to 6.5 per cent by the end of 2022.
Analysts Capital Economics said: ‘Most of these exports leave from Black Sea ports, at the heart of where conflict might occur.’
Fighting could also wreck crops and it is estimated that rising agricultural prices would add 0.2 to 0.4 percentage points to the rise in the cost of living, which is already expected to hit 7.25 per cent in April.
Savings and pensions will also suffer. Yesterday £89.7billion was wiped off stocks in London as the FTSE 100 index of Britain’s biggest companies fell by 3.9 per cent.
That will squeeze the investments of anyone with shares in their pensions and ISAs.
The Moscow stock exchange dropped 45 percentage points at one stage yesterday and finished down 33 per cent.
The rouble also plummeted to a record low against the dollar.
In London, traders were already worried about rising inflation caused by the pandemic, and concerns that central banks could put up interest rates to keep a lid on prices, making it more expensive to borrow money.
Russ Mould, of AJ Bell, an investment company, said that war would see ‘markets go through a difficult period for longer than people might have previously expected’.
Wholesale gas prices spiked 40 per cent, fuelling fears that millions face two massive increases in energy bills.
The average bill for a typical household is due to rise by £700 to just under £2,000 in April, but analysts suggest there could now be a second increase of £1,000 in October.
The UK wholesale price of gas rose by 36 per cent to 290p per therm. Earlier in the day it had hit 348p per therm, more than eight times the price a year ago.
This will feed through to electricity, because much of this comes from power stations that burn gas.
Martin Young, an analyst at Investec, expects ‘a significant jump in the cap in October. This could be devastating for UK households’.
Europe is reliant on gas from Russia and any interruption to supplies as the result of conflict or sanctions is expected to drive up global prices.
Britain gets less than 3 per cent of its gas from Russia, but any rise in the global price will push up the figure UK homes and businesses have to pay.
At one point yesterday the oil price reached $105.79. Russia is a big exporter of oil, and fears of disruption to supply left the price of a barrel of crude hovering at about $103 last night, its highest for almost eight years.
This week, unleaded hit a new record of nearly 149.5p a litre and diesel almost 153p.
Tom Tugendhat, chairman of the foreign affairs committee, told Radio 4’s Today porgramme that if the situation in Ukraine continued ‘you can forget about petrol at £1.70 a litre, which is where it’s heading now. It will be significantly higher’.
The Road Haulage Association said that delivery costs will spiral, sending prices in the shops higher still.
The Government said it will monitor and offer support as required if the full-scale invasion of Ukraine by Russia leads to a surge in global food prices.