What is the future for diesel pricing?

The Competition and Markets Authority Analysis of Road Fuel Prices have recently been published (6th December 2022), in which it was stated that 2022 has been the most volatile year for fuel prices on record, that retail pricing warrants further investigation, while fluctuations in margins made by the refineries have been driven by global factors.

The CMA also stated that prices rose by around 50p/litre in the first 6 months of the year, the largest increase ever recorded in a single year, however, this was followed by a fall of 14p/litre for diesel. Diesel’s premium cost over unleaded has increased due to Western Europe’s reliance on diesel imports from Russia. During the year a retailer’s margin on diesel grew by 2-3p/litre and this will be investigated further by the CMA. Especially as evidence of what is known as “rocket and feather” pricing was discovered for the first time this year. (This is when prices rise quickly as costs rise, but fall slowly as costs fall, meaning the retailer makes more profit during a fall)

The wholesale price of fuel plummeted 33p/litre in October, but the average pump price declined by just 8.4p at the beginning of December, suggesting that we are currently in a "feather" phase for diesel (RAC Fuel watch, 2022).

Although the price of diesel fell by 6p/litre in November, data gathered by the RAC shows the retail price should have fallen by twice that amount but hasn’t. Diesel dropped from 190.31p to 183.87p/litre. It is now believed that retailers are receiving around 20p margin for every litre sold.

Future Diesel pricing

A 23% rise in fuel duty tax is presently proposed for March 2023, which may raise the cost of petrol by roughly 12p/litre. Fuel duty was slashed by 5p/litre earlier this year, and it will remain in effect until March 2023. The final decision on fuel duty will be announced in the Spring Budget Statement.

We might be anticipating retail prices to decline in the near future due to a wholesale fall, but fuel retailers may be hanging onto the price of petrol because they expect wholesale costs to rise shortly. Diesel prices are projected to rise as a result of OPEC's recent statement that it would go ahead and reduce output by 2 million barrels per day. Prices are projected to rise to 190p/litre as a result.

The major fuel retailers: Shell, Texaco, Esso, BP, Tesco and Asda have all waned that fuel prices are set to increase as OPEC announced the cut in production.

What can be done to reduce costs?

“Coupled with driver shortages delivery fleets are facing some challenges at the moment.” Said Andrew Tavener, EMENA Marketing Manager for Routing, Descartes.

“To counteract growing expenses, delivery companies and retailers need to maximise the number of deliveries made per route, making the most of available vehicles and drivers. The extensive route optimisation and delivery scheduling capabilities offered by Descartes will have a dramatic effect on a fleet's efficiency, resulting in substantial savings on fuel and per-delivery costs.”

Contact us Now to discover how route optimisation can improve your fleet’s efficiency and increase delivery density or try our Fuel & CO2 savings calculator to discover how much you could save.