Gap between average petrol and diesel prices reaches a record 20p, according to the RAC

The gap between the average price of petrol and diesel has surpassed 20p a litre for the first time ever, according to RAC Fuel Watch data.

As of Wednesday drivers were paying an average of 163.13p for unleaded while diesel had climbed to nearly 184p (183.94p) – a difference of 20.35p a litre.

Following the announcement from oil producer group OPEC+ a week ago that it was cutting production by two million barrels a day, the wholesale price of refined fuel has increased as a result of oil trading above $90 having been below that mark at the end of last month.

RAC fuel spokesperson Simon Williams said: “Since OPEC and its allies agreed to reduce oil supply substantially we’ve seen the price of wholesale diesel go up by 9p a litre and petrol by 4p a litre.”

“This has led to the average price of diesel going up by almost 4p a litre and petrol by nearly a penny.”

“Sadly for diesel drivers, the situation seems certain to get worse with prices heading back to 190p a litre which will add £3 to the cost of a tank (£104.5).”

What makes up the cost of a litre of fuel?

The price you pay for petrol and diesel at the pumps is governed by wholesale fuel prices, which in turn, are affected by:

• the global price of crude oil
• supply and demand for crude oil
• oil refinery production and capacity
• the pound to dollar exchange rate, as refined fuel is sold in US dollars per metric tonne
• distribution costs
• the margin fuel retailers decide to take
• fuel duty charged by the Government, currently 52.95p a litre
• VAT charged at the end of every forecourt fuel transaction, currently at 20%

While some of these stay largely static – such as the fuel duty rate and VAT – others such as the oil price and dollar to sterling exchange rate can be very volatile.

This explains why prices rise and fall.

A combination of high oil prices and weak Sterling leads to the highest pump prices.