Petrol and diesel prices have fallen in recent weeks and months, but still remain a major drain on household finances amid the cost of living crisis.
According to the RAC, the average UK cost for a litre of petrol is 143p, down from a peak of 191.4 in July 2022.
Diesel too has fallen over the past six months, down to 146p per litre from a high of 199p.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
But how does the cost of filling up in the UK compare to the rest of the world?
Why is the price of petrol high in the UK?
Since the Russian invasion of Ukraine, the price of petrol has risen globally on the back of volatile oil prices and the rising cost of energy. Petrol prices are closely related to the wholesale cost of oil - a general rule of thumb is pump prices will rise by 1p for each $2 rise in the oil price.
But the price you pay at the pump in the UK takes into account a number of factors beyond the cost of oil.
Fuel duty represents roughly 35% of the cost of a litre of petrol, with the cost of wholesale petrol to the supplier being only the second largest component – accounting for roughly 29% according to an analysis by the RAC. This includes refining costs.
VAT, retailer profits, delivery and distribution and biofuel content all contribute to the overall cost.
The cheapest places in the world to buy petrol
According to globalpetrolprices.com, the cheapest place on Earth to fill up your car is Venezuela, at $0.02 per litre. Venezuela is home to some of the world’s largest oil reserves, and oil accounts for 99% of export earnings, says oil cartel Opec.
Next comes Libya, where a litre of petrol costs $0.40. Then comes Iran, with petrol at $0.50 a litre.
Filling up the UK’s best-selling car, the Vauxhall Corsa, would cost 80p in Venezuela but £65.20 in the UK/
The most expensive places to buy petrol
Hong Kong is widely recognised to have the most expensive petrol in the world at around $2.96 per litre. The country primarily relies on a small number of companies in Singapore to import petrol and transportation costs are high, with the costs reflected in what drivers are expected to pay at the pump.
Iceland shares some geographic limitations with Hong Kong and it too suffers from high fuel costs. A litre of petrol costs around $2.24, only a fraction more than the third most expensive country, Monaco ($2.22).
SEE ALSO
What makes up the price of a litre of petrol?
Why petrol prices are higher than in 2008, despite lower oil prices now
How to cut your car’s fuel bill as the price of petrol hits a record high
-
A junior ISA could turn your child’s pocket money into thousands of poundsPersuading your child to put their pocket money in a junior ISA might be difficult, but the pennies could quickly grow into pounds – and teach them a valuable lesson about money
-
Cost of Christmas dinner jumps 6.5% as grocery price inflation rises againThe average Christmas dinner for four now costs £32.57 as grocery price inflation increases - but what does it mean for interest rates?
-
What makes up the price of a litre of petrol?Briefings The cost of filling the average car with fuel is falling. Here’s what makes up the price of a litre of petrol.
-
UK inflation falls to 10.7% but cost of living pressures remainNews CPI is down to 10.7% from last month’s 41-year-high of 11.1%
-
What is a recession? UK impact explainedAnalysis Office for National Statistics (ONS) figures show UK GDP growth has gone into reverse. But what does a recession mean?
-
UK inflation hits 41-year high of 11.1%News The rising costs of energy and food have pushed the figure up to its highest level since 1981.
-
What is inflation and how does it affect you?We now appear to be past the worst of the cost-of-living crisis. But what is inflation – and how does it affect your personal finances?
-
UK inflation back to 10.1%News UK inflation creeps back to its 40-year high from the summer, driven by rising food costs
-
A forgotten lesson on the dangers of energy price capsAnalysis Liz Truss’s proposed energy price cap is an ambitious gamble. But a similar programme in Spain ended up being a fiasco, say Max King and Tom Murley. Here, they explain why Truss’s plan could be doomed to failure.
-
Energy Price Guarantee: Liz Truss’s gigantic state handoutBriefings The PM railed against government-funded largesse on the campaign trail. Now she is introducing energy price guarantees that will cost more than furlough. Is that a good idea?
