The switch to ‘greener’ petrol is fuelling soaring prices at the pumps which could overtake the all-time record within days, the RAC warned yesterday.
It happened as the average cost per litre rose to 141.76p from 141.35p yesterday and just shy of 2012’s 142.43p record.
The rising cost of filling up will pile pressure on Rishi Sunak not to increase fuel duty in next week’s Budget – the levy has been frozen at 57.95p per litre for 11 years.
The RAC said filling up would be cheaper if E5 had not been replaced by ‘greener’ E10 as the standard fuel last month, and stressed that ‘greedy retailers fleecing motorists’ was also a factor in the soaring prices.
A spokesperson for the Government dismissed the notion that E10’s higher cost ethanol had caused an increase in prices.
The RAC said filling up would be cheaper if E5 had not been replaced by ‘greener’ E10 as the standard fuel last month, and stressed that ‘greedy retailers fleecing motorists’ was also a factor in the soaring prices
Since August 31, when E10 was first introduced at forecourts, the wholesale price of ethanol has risen more than 50%.
The RAC stated that the two biggest factors contributing to rising pump prices were the soaring oil price and greedy retailers evading motorists.
A separate analysis by the AA revealed that profit margins for forecourts now average around 12p per litre, an increase of 10p in the summer.
The RAC’s fuel spokesman, Simon Williams, said: ‘The average price of petrol sadly seems to be on an unavoidable journey to a new record high.
‘While the hike at the pumps has primarily been driven by the price of oil doubling in 12 months, other factors are also combining to make matters even worse.
‘The bioethanol component of unleaded has increased from 5 per cent to 10 per cent with the introduction of E10 in September and unfortunately that costs even more than petrol on the wholesale market.
‘Retailers are also taking a bigger cut on petrol than they normally do, which is a further blow to drivers.’
Since August 31, the day E10 was introduced at forecourts, the wholesale price of ethanol has risen more than 50%.
He also called on the government to temporarily reduce VAT on fuel at next week’s budget to help hard-pressed motorists.
He stated that this would be more effective then slashing fuel duties, because there is a risk this might not be passed on to all retailers at the pumps.
Luke Bosdet, the AA’s fuel supremo, said: ‘The average price of petrol is knocking on the door of the record set in 2012, which is putting enormous financial pressure on UK families with cars.
‘Unfortunately, retailers are wanting to have their cake and eat it by artificially increasing prices, like they did last year when the price of oil crashed, but didn’t pass on the savings.’
The roll-out of E10 began on September 1 as part of the government’s aim of reaching net-zero emissions by 2050.
It is considered ‘greener’ because it is blended with 10 per cent bioethanol – double the amount used in E5 – which is also made from materials such as crops and waste wood.
E10 is about 1.6% less efficient than E5. This means that drivers will need to purchase more E10 to cover the same distances. This can increase annual fuel costs.
It is also not compatible for up to 700,000. Older cars, so these drivers will need to spend more on super unleaded. Yesterday’s average pump prices were 152.91p a litre.
Transport Secretary Grant Shapps hailed the launch of E10, saying it will ‘reduce greenhouse gas emissions as we accelerate towards a greener transport future.’
Brian Madderson is the chairman of the Petrol Retailers Association. He represents independent forecourts and stated that profit margins must be increased to recoup losses during the pandemic.
He said: ‘We have got to have a sustainable business going forward, so what used to be an acceptable margin is no longer and has to be increased.
‘We’re still only talking about 86 per cent of pre-pandemic sales volumes currently, which in terms of lost margins is still pretty brutal.’
The Department for Transport was contacted for comment.