Fuel prices can often feel like a mystery, with prices fluctuating and recently not getting any cheaper. If you own a vehicle, it’s important to understand the breakdown of fuel prices so you can confidently budget for your costs. In this blog, we’ll break down how fuel prices are determined, what factors affect them, and how you can save on fuel costs.

The price of a litre of fuel can be split into roughly six parts:

  • The wholesale cost of petrol or diesel - This is determined by the price of oil. It is also important to not that the oil is sold in US dollars so the strength of the british pound also plays a role in the price
  • Biofuel content - The cost of making fuel more eco-friendly
  • Retailer profit margins - The cut taken by the garages and supermarkets who sell the fuel
  • Delivery and distribution costs - This is the cost for transporting the fuel from A to B
  • Fuel duty - The government tax on fuel
  • VAT - Added on top of product-specific taxes

What makes up the cost of a litre of unleaded petrol?

  • Wholesale Petrol - 83.42p per litre (45% of total cost)
  • Fuel Duty - 52.95p per litre (29% of total cost)
  • VAT @20% - 30.84p per litre (17% of total cost)
  • Bio content (up to 10%) - E10 - 12.65p per litre (7% of total cost)
  • Retailer Margin - 3.47p per litre (2% of total cost)
  • Delivery & Oil Company - 1.7p per litre (1% of total cost)

Source: RAC • Retail price 185.04 - Total tax 83.79

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What are the latest UK petrol prices and diesel prices?

Below are the latest unleaded petrol, diesel and liquid petroleum gas (LPG) average prices across supermarket and independent garages in the UK:

Unleaded petrol prices

  • UK average - 149.52p a litre
  • Supermarket average - 146.01p a litre
  • Motorway average - 172.56p

Diesel prices

  • UK average - 151.16p a litre
  • Supermarket average - 147.81p a litre
  • Motorway average - 173.91p

Super unleaded and LPG prices

  • Super unleaded - 164.50p
  • LPG - 87.67P

*Correct as of 15th August 2023 - Source: RAC Fuel Watch

Why is fuel so expensive?

Fuel prices have skyrocketed, causing widespread concern. The recent conflict between Russia and Ukraine, coupled with Russia's significance as a major oil and gas exporter, has severely disrupted global supply chains. As a result, fuel prices have surged even further, leaving those who enjoyed the relatively cheaper fuel in 2020 taken aback.

Save money by going electric

Save money and help the environment by going electric. Petrol and diesel costs are expected to remain high, even for households that follow every fuel-saving tip. By making the switch to an electric car, you can bypass the fuel crisis and potentially save a significant amount of money.

Charging an electric car is generally much cheaper than fueling with petrol or diesel. By installing a charger at home and charging overnight, you can further reduce these costs.


Understanding the breakdown of fuel costs can be daunting, but it’s important to know how fuel prices are determined if you want to save money on transportation costs. By focusing on your driving habits, utilizing fuel rewards programs, and paying attention to local prices, you can significantly reduce the amount you spend on fuel each month.



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