UK Petrol Prices Set to Rise – could this help used EV sales activity?
Trends in wholesale utility prices and planned increases in fuel duty might be a catalyst for used EV activity. This is the assessment by MotoNovo Finance, Commercial Director, Debbie McKay: “The cost of running a car is a natural part of the affordability assessment in our lending decisions. Given the dramatic changes in utility prices, it has come under even closer scrutiny over the last eighteen months. Now we can see the potential for a shift towards EVs, with significant rises in petrol and diesel costs due to fuel duty increases and a fall in the cost of electricity.”
Just six months ago, gas prices stood at around £265 per megawatt-hour. By the start of the year, it has fallen to £70, and prices for gas to be supplied in March are down at around £46. The Bank of England is expecting these falls to feed through into the economy and drive down inflation.
The fall in gas prices has been shared by oil leading to average petrol prices falling to their lowest level since Russia’s invasion of Ukraine last year to an average of 148.89p per litre at the end of January. However, dependent on actions by the Chancellor of the Exchequer, increases in fuel duty can be expected in the month ahead.
Last March, the Chancellor of the Exchequer, then Rishi Sunak, cut UK fuel duty rates by 5p for 12 months to help struggling families manage the soaring price of fuel alongside other rising household costs. The step was set to last for 12 months, so at this time, on 23 March 2023, this reduction could end.
Added to this is the possibility that petrol and diesel might go up by around 12p a litre. Such a move was detailed in the economic and fiscal outlook document published by the Office for Budget Responsibility last November.
As Debbie concludes: “The potential for a notable hike in petrol and diesel prices, a potential fall in electricity prices and a realignment in used EV values could spur more people to make the switch to electric in the coming months. Whether now is the time for the Government to increase fuel duty as planned is something we can expect the Chancellor to address in the Spring Budget. However, increases seem inevitable sooner or later, and this could favour EVs.”