The financial strain on delivery services and haulage companies is intensifying as the cost of diesel has surged compared to petrol, reaching a two-decade high. This spike in fuel costs is also trickling down to consumers, inflating the prices of goods and services.
The backdrop to this economic squeeze is the escalating oil crisis involving Iran, which has driven the average price of diesel up to 29p more per litre than petrol, with diesel priced at 181p compared to petrol’s 152p. This represents the largest disparity between the two fuels since at least 2003, as reported by the RAC Foundation, and suggests that these elevated prices might linger for an extended period.
This sharp increase in diesel costs poses a significant threat to the affordability of services such as plumbing and grocery deliveries. These industries depend heavily on diesel-powered vehicles like vans and lorries for their operations. As a result, consumers might face higher costs for everyday services and products.
One of the key reasons behind the rapid rise in diesel prices is the UK’s heavy reliance on imports for this type of fuel, which has caused its price to escalate at nearly twice the rate of petrol.
Petrol drivers are not immune to the effects of the crisis either. Petrol prices have reached their highest average at forecourts in 28 months, adding further pressure on motorists.
In a blow for petrol drivers, it also climbed to its highest average price at forcecourts for 28 months yesterday.
Chancellor Rachel Reeves faced fresh calls to cut motoring taxes to spare drivers some pain at the pumps and to try and keep inflation down.
Steve Gooding, director of the RAC Foundation, said: ‘Diesel is the lifeblood of millions of small businesses, but today white van man is bleeding cash just to stay on the road.
Forecourt prices have been spiralling since the Iran war broke out, with diesel soaring at about twice the rate of petrol
It is now costing motorists around £10 more to fill the average family car with petrol and £20 more with diesel
AA President Edmund King called on Chancellor Rachel Reeves to look at cutting fuel taxes to help out hard-pressed drivers
‘Whether you drive or not, soaring diesel prices will take money out of your pocket, either at the pump or in the bills you pay for everything from calling out the plumber to getting a home delivery.
‘If oil prices remain at this level the impact on the forecourt could be felt for weeks, if not months.
‘That’s bad news for everyone, not just drivers of the UK’s 4.6 million diesel vans, the majority of which will be used for work purposes.’
AA president Edmund King said: ‘The extra hike in diesel prices disproportionally hits businesses, deliveries, the service industry and the self-employed.
‘The Government must be concerned about sky-high diesel prices as it is these costs that fuel inflation.’
He added that, because Ms Reeves is raking in tens of millions of pounds in extra VAT receipts due to higher pump prices, the Chancellor should look at using this to cut fuel taxes.
Labour has refused to help drivers since the war broke out. By contrast, several other European countries have either cut fuel taxes or capped forecourt prices to spare motorists some pain at the pumps.
Ministers have insisted they will press ahead with hiking fuel duty, another tax on fuel, this September despite the crisis.
The hike, announced by Ms Reeves in November last year, will see the levy rise 5p a litre from this September, adding another £3 to the cost of a fill-up.
Oil prices – which have a significant effect on the cost of wholesale fuel – have soared in response to Iran’s stranglehold on tankers passing through the Strait of Hormuz, sparking rising pump prices.
Filling the average family car with petrol now costs £10 more compared to before the Iran conflict started on 28 February. Filling up with diesel is £20 more expensive.
According to DVLA figures, there are around 16.2million diesel vehicles on the roads in the UK, which includes the vast majority of vans and lorries.
The RAC’s Simon Williams added: ‘The financial strain on the eight-in-10 motorists that tell us they depend on their cars continues to build, and at a particularly rapid rate for those who drive diesel vehicles.’
A survey by the FairFuelUK campaign group found more than a third (36.4%) of 3,678 sole traders, including bricklayers, plumbers and electricians, said current pump prices could drive their businesses to the brink of collapse.
The group’s founder, Howard Cox, said: ‘FairFuelUK and its 1.8million supporters urge the Government at the very least to commit to maintaining a freeze on fuel duty for the entire duration of this Parliament.’
