If you’re a car driver chances are you will have realised that every week it seems to be costing you a small fortune to fill your car up with fuel.
This is because the price of petrol has been steadily rising for many weeks (we’re now into the fourteenth week of rises) and this trend shows no sign of abating. In fact, some motorists are facing the very real prospect that by the end of the year they will be priced off the road as the cost of oil hits record highs.
We are currently in the midst of a pricey fuel crisis that could see people having to spend over £5 more to get their car filled up and this expense, according to experts, will continue to creep up until at least the end of the year. Prices are now at a four-year high and to add to this industry analysts also predict that there will be an increase in fuel duty at the next budget. The government hasn’t raised fuel duty for around seven years but in the next budget there is a very real possibility that fuel duty will go up in a bid to generate more money for public spending (a lack of public spending is something that the current government has been continually attacked for so it appears they are going to heap more pressure and misery on motorists to alleviate this spending issue.)
We hate to be the bearers of bad news and we honestly can’t believe that people are expected to take such a hit when their budgets are already squeezed so tightly, but things really are looking bleak as industry insiders have also hinted that these high prices may be here to stay for the foreseeable.
So, what exactly is going on with these price rises?
Ultimately, it’s the same old situation as what it always is. Demand. Although this time there is also another aspect to this high oil price scenario and that is…Donald Trump.
Yes, you read that correctly. Donald Trump is to blame for us having to fork out more to fill our cars up!
All joking aside, basically, the US supremo has recently scrapped the Iran nuclear deal and put sanctions in place on other oil rich nations. This has had an immediate impact on the production of oil and consequently the cost of that oil.
According to the IEA (International Energy Agency) there has been a marked reduction in the production of oil in oil rich countries. We’ve seen this situation many times before but whilst people have been known to just about manage to keep their cars on the road, it has led to people really being pushed to the brink financially. This time, however, we have entered unchartered waters as the aforementioned sanctions add even more pressure to the oil industry leaving motorists wondering when the price rises are going to cease, if ever.
These are uncertain times in the oil industry that’s for sure.
It’s another blow to UK families really. For the last few months we feel we’ve done nothing but write articles documenting how people are struggling more than ever to get to the end of the week without being in debt – and now we have negative oil price news. As it stands, people already cannot afford to keep up with the cost of the food shop to feed their families and as the winter months approach, people are getting anxious about how they are going to afford the price of energy and keep their houses warm.
The news that fuel prices will continue to rise and could potentially reach highs that have previously been unseen before petrifies us in all honesty. Why? Well, let’s look at what household budgets are already having to go through. Energy prices have, on the whole, risen in the last 24 months – in particular electricity prices. In a few case studies we have noticed that gas prices have decreased by around 3.2 per cent (but this isn’t much of a saving when you take into account electricity prices have gone up! People are still out of pocket because electricity prices in the last 24 months have gone up more than gas prices have decreased.)
Then there is the aforementioned burden of the costly food shop. Families have noticed a significant increase in the cost of their groceries and in particular have seen a 14 per cent rise in the cost of some dairy products over the last couple of years. No matter how hard people try they can’t seem to keep the cost of the family shop down.
All the above points are made even harder to swallow when you realise the fact that wages, on the whole, haven’t gone up to compensate the rise in other outgoings.
The cost of living has risen quite dramatically in a small space of time, yet people are still earning the same or less than what they were a decade ago. In an article we wrote not too long ago we highlighted how the financial crash of 2008 was still having a profound negative impact on people’s take-home pay. It showed that people are still a good £300+ down annually on what they would have earnt pre-crash. The gulf between wages and the cost of living is rising to scary levels and in all honesty, we can see many families sinking further towards that poverty line.
Going back to the main topic which is the petrol price rise, it would be the natural thing to assume that people would ditch their cars in protest at the significant price increase and opt to use public transport instead, whilst the cost of fuel calms down. This isn’t exactly an option either.
Public transport is also equally expensive with the trains, in particular, proving extremely costly for customers. In some parts of the country up to a third of people’s wages are lost every year to public transport costs – it’s a national disgrace.
Unfortunately, there is nothing anyone can do to change the pace or direction that oil prices are headed. It is something that is out of everyone’s control and no-one knows when things will even off and come back down to manageable levels. Uncertainty and the unknown are two terrible things to experience when it comes to money and this is exactly where we are in terms of oil prices. People need to bear in mind that sanctions imposed on some of the oil-rich countries by President Trump won’t actually take effect until the start of the New Year meaning that people won’t realistically know the true impact of the price rises and won’t see whether they are here to stay until a good six months down the line.
Also, if the pound gets weaker, people could see more detrimental effects on their hard-pressed pennies – no matter which way people look at it, there are a lot of uncertainties that could all contribute to families going bust.
The only thing to do in these situations is to take control of the controllable. Reduce spending on nights out and socialising and anything else that isn’t classed as a necessity but more of a luxury. We appreciate that people deserve to have a life outside of work and paying bills, but whilst things are so unstable, and people are feeling the squeeze, it is best to take a hold on money and make sure that the next few months are manageable and can be got through.