Petrol may go up 5p a litre as pound slides against dollar

PETROL prices are set to rise by up to 3p a litre this week and could climb by as much as 5p a litre if sterling continues to fall against the dollar.

They are already at a near year high of 111.2p per litre, up from 102p at the beginning of the year. But despite crude oil falling, it is priced on international markets in dollars, so the weaker pound will still mean higher bills at the forecourt.

‘The immediate impact of the collapse in the pound against the dollar is that petrol on the forecourt is likely to go up by 2p to 3p per litre next week,’ said Brian Madderson, chairman of the Petrol Retailers’ Association which represents the bulk of independent petrol retailers.

‘The pump price will start to move from the beginning of this week and if the pound collapses further there will be an even bigger hit. Some US investment banks are saying the pound could collapse to as low as $1.10, in which case we will be seeing another 5p on prices.’

Madderson said a 2p per litre increase could be ‘accommodated’ by consumers since petrol prices are still a long way off the 142p per litre reached in 2012.

‘Prices have crept up since Christmas but a 5p to 6p increase would make people think about whether they needed to drive as much, with all the knock-on effects for the economy that this implies,’ he said. ‘But the bigger picture is what will happen to the economy? If we start seeing a contraction then fuel volumes will suffer.’

The price of oil sank back on Friday to $48.6 a barrel for Brent crude. The price of oil has plummeted over the past 18 months as Saudi Arabia opened the pumps in a bid to retain market share. However, the decline in the pound against the dollar more than counteracts the fall in price.