How much have fuel prices gone up due to the Iran war?

[0:08] so for the next 10 minutes or so we're going to try to answer some of the questions you've [0:12] been asking about the multiple impacts of the iran war and of course what it means for the [0:17] cost of essentials fuel energy bills food fertilizer joining me now to help make sense [0:23] situation is ben chu our policy and analysis correspondent for bbc verify and sarah pennels [0:30] consumer finance specialist at royal london welcome to both of you so let me start with [0:35] sarah first of all thank you so much for joining us on your voice sarah and i guess people have [0:40] been asking the most questions it has to be said about petrol prices and so the first one i want [0:45] to ask you is how much has petrol gone up as a result of the iran war sarah well there are a [0:52] number of organizations that track the price of petrol the rac is one now it says that since the [0:57] start of the iran war a liter of petrol has gone up by almost 20 pence uh 21 pence in fact just [1:05] over 20 pence a liter [1:07] so it's now people are paying on average over one pound fifty a liter i was checking earlier [1:12] on today one pound fifty three of course if you buy your petrol you're forced to buy your petrol [1:17] and motorway service station you'll pay nearer to one pound seventy six on average so it's it's [1:23] quite a rise and anybody who's filling up their tank or as a lot of people are doing maybe just [1:27] topping up their tank rather than filling up will really have noticed that difference in quite a [1:32] short time and so ben i guess the question next is where do we get our petrol from [1:37] well it's a little bit complicated maria most of the petrol is refined in the uk so it's produced [1:42] by uk refineries and actually they produce more than we consume so some of it is exported as well [1:48] but of course it's made from crude oil that that they used to in those refineries and although the [1:53] north sea produces quite a lot of crude oil still we actually import a lot as well and that's mainly [1:59] what's going into the uk's refinery is imported oil from places like america uh and from places [2:06] because of the nature of the oil, which our refineries are built to process, if you like. [2:12] So petrol mainly coming from UK refineries, but the oil that goes into them mainly from other countries. [2:18] So is there a shortage then, Ben, of fuel, do you think? [2:21] Well, we should be very careful because the retailers, the petrol retailers and energy UK organisations [2:26] are very clear and very insistent that there is not a shortage at the moment [2:30] and people should just carry on doing what they would normally do in terms of filling up their vehicles. [2:35] Of course, we remember the fuel shortage a few years ago when everyone tried to fill up simultaneously. [2:41] There were shortages. That's just because if everyone puts all the petrol that's out there in their tanks, [2:45] there's not enough to go around. So it's really important to stress, I think, [2:49] that at the moment the industry says there are sufficient supplies that people can just carry on [2:54] and they don't need to hoard or panic buy petrol. [2:56] So any shortage could potentially be a people-caused shortage rather than actually a fuel shortage. [3:00] Yeah, that's the fear and that's why that message has gone out. [3:03] Now, of course, the price is going up because global oil is... [3:05] globally traded, that's pushing up the price. [3:07] So people are feeling the impact of this in terms of higher prices at the pump. [3:12] But at the moment, they're saying there is enough to go around for people to carry on their ordinary lives. [3:16] Sarah, I wonder if I can ask you about the difference in diesel and petrol because unleaded, [3:21] because we've seen diesel going up more than petrol. [3:23] Why is that? [3:25] You're absolutely right, Marion, that diesel has gone up by a lot more than petrol. [3:29] So that's gone up by about 40 pence a litre since the end of February and people are now paying, you know, [3:35] considerably more if their car runs on diesel. [3:39] And I think there's a couple of things. [3:40] Now, I'm not a diesel refinery expert, but my understanding is that the process of refining diesel is more complex. [3:47] It's more costly. [3:49] Obviously, also a lot of our, you know, our lorries that are sort of carrying goods around, they run on diesel. [3:54] There's that demand. [3:56] And so those elements, sort of what goes into diesel, first of all, the process and the fact that there's higher commercial [4:02] demand all the time, seems to be feeding through. [4:05] I mean, there are some things that people can do. [4:08] So earlier on this year, the government launched a fuel finder service which uses real time data from petrol forecourts. [4:16] Now, that's not something that individuals necessarily want to go and have a look at. [4:20] It's not very user friendly, but that then feeds into petrol and diesel price comparison apps and websites that you can use. [4:28] So what's changed earlier on this year is that now gets real time data. [4:32] So there are several of them out there. [4:34] I mean, also, just think about how you're driving. [4:35] It's not necessarily about driving slowly, but driving efficiently. [4:39] That can make a real difference. [4:41] And then I guess lastly, you know, don't drive around on things like flat tyres or tyres that aren't properly sort of pressurised. [4:48] All those things can mean that you use more petrol. [4:50] So, yes, you can all pay more. [4:52] We are all paying more for our petrol. [4:54] But if you can make it go a bit further, that may help your budget as well. [4:58] Good advice there, Sarah. [4:59] Thank you. [5:00] Ben, this one for you, and it's from someone called Keith, who's in Sunderland, who asks this. [5:03] Why has no one mentioned the millions of pounds of petrol that are being spent on petrol? [5:04] Why has no one mentioned the millions of pounds of petrol that are being spent on petrol? [5:05] Why is no one mentioned the millions of pounds the government is making due to higher fuel costs at the pump? [5:09] And why have they not reduced fuel tax while prices are so high? [5:13] Well, it has actually been mentioned that VAT will be bringing in more from fuel duty and the other revenues. [5:19] There's an investment bank called Stifel, which has estimated that the government is making an extra £20 million a day from the VAT on fuel and fuel duty, [5:29] and also the windfall taxes on the North Sea because they'll be making more profits. [5:33] So over a full month, the — [5:35] Okay. [5:35] — [5:35] year if petrol and fuel prices remained where they are now it's estimated that [5:40] that would bring in about eight billion pounds a year extra to the government so [5:44] that's about twenty million pounds a day that's their calculation is broadly [5:47] plausible of course if fuel prices do remain where they are we can't be sure [5:51] about that but I think we need to be a little bit careful in assuming there's a [5:54] big windfall for the government from this because there are other things [5:58] going on in the economy as well which such as growth is expected to slow down [6:02] as a result GDP growth is but to slow down as a result of these high prices so [6:06] that I mean lower tax revenues in other areas also government borrowing costs [6:10] have gone up quite considerably since this crisis began so the government will [6:14] be spending more on interest so financially the government will perhaps [6:17] be probably be net worse off as a result of this crisis so there isn't a great [6:22] windfall really in terms of the government's coffers which it can [6:25] redistribute to drivers for instance necessarily by cutting fuel duty or [6:30] other giveaways so it's important to know that that's something that we need to [6:32] think about the public finances and the economy as a whole when it comes to a [6:35] crisis like this and what about fuel prices coming down when can we expect [6:39] that to happen well the fuel price the pump very closely matches the oil price [6:44] the global oil price and that's been on a roller coaster ride as you know since [6:48] this crisis began it started out about $60 a barrel and now it went up as high [6:55] as 120 now it's about $100 so look who knows where it's going to end up it [7:01] could come down just a rule of thumb the average when the oil price for every [7:06] one dollar that the global oil price sorry every two dollars the global oil [7:11] price moves it's about 1p at the pump so if it was to come down say by about $10 [7:16] a barrel that would be about 5p lower in terms of diesel or petrol costs so we [7:23] don't know where it's going to go but just bear in mind that link between the [7:26] crude oil price as quickly as it goes up well we're in very unusual times not [7:31] normally there's usually a lag but at this moment in time the things are so [7:35] volatile it's very very difficult to say um okay let's talk a little bit about [7:39] energy bills help or not Sarah let me ask you this um the Chancellor Rachel [7:44] Reeves and of course the government's support energy bills have said the [7:48] government will support energy bills uh because of the Iran war of course some [7:52] of those bills have been pushed up but who is going to get the help Sarah for [7:56] these energy bills and how will the energy bill help work if based on [8:01] household income because that's the mood music coming from the Chancellor [8:04] isn't it yeah now there's a lot we don't know actually about how this energy bill [8:09] help will work I think what is becoming more clear is that it's not likely that [8:14] this help will be available over the summer so the Chancellor was saying that [8:19] people's energy use is lowest between July and September now obviously as of [8:24] today the energy price cap has fallen it means actually people who are on the [8:28] standard tariff a typical user we're paying 10 pounds [8:31] a month for their energy than they were yesterday or yesterday's prices and [8:36] obviously from July that's really where the concern is what's the energy price [8:39] cap going to do from then the Chancellor is seem to be saying that this will not [8:43] be happening until the autumn and as you say it will be based on household income [8:47] or it could be based on household income I think at the moment they haven't quite [8:51] decided how it'll work one idea that's being floated around is extending the [8:56] warm home discount scheme now there are several schemes that help people of [8:59] different ages and in different circumstances [9:01] this gives people 150 pounds off their electricity bill and in October last [9:08] year it's extended almost so that now it reaches six million people rather than [9:12] 2.7 million before however it is linked to people being on certain benefits so [9:18] things like pension credit for pensioners who are on a low income things [9:21] like Universal credit for people who may be in work or out of work and so on that [9:26] doesn't take household income into account as such so I think if the [9:30] government is saying it wants to [9:31] get this to household income rather than whether somebody's on certain benefits [9:35] that's going to be the issue that probably they're going to spend more [9:39] time thinking about so I think there's lots of questions about this unlike the [9:42] heating oil scheme which we know more about there are lots of questions about [9:46] how people might get help with their energy bills come the autumn I think the [9:50] other thing as you say you know we have had help before in 2023 when we were [9:56] getting a lot of help with our energy bills I think what we can rule out is [9:59] that everybody's going to be getting [10:01] some money off specifically to help with the costs of higher bills as a result of [10:06] the Iran war I think the plot what the government wants to do is to make sure [10:09] it is well targeted how that works I think we'll hopefully see some details [10:14] in coming weeks and months a heating or question actually for you Sarah seeing [10:17] as you mentioned it this one is from Lynn last July 500 liters was 261 pounds [10:23] March this year it's 681 pounds where's the help for those of us who have to buy [10:29] it I mean people who rely on heating oil [10:32] many of them have been I think absolutely shocked by what's happened to heating or [10:37] prices and they've actually almost doubled in just over four weeks now the government [10:42] has already announced over 50 million pounds of help for people who have high heating oil bills [10:48] but and it's a big but we know that there's about one and a half million people who have [10:54] who rely on heating oil for their heating so you know 53 million pounds divided by a million and a [11:00] half that's not going to be much if it's given [11:02] to everybody so what the government is saying is again this is going to be very targeted it's [11:07] been rolled into something called the crisis and resilience fund which actually launches today now [11:12] it's a it's a slightly different fund to one that ran out yesterday called the household support [11:18] fund sorry all these names flying around what's important is it is administered by local authorities [11:23] so from today this new fund does include some capacity right to pay for heating oil bills [11:30] that's who you have to apply for but again [11:32] not everybody who's experiencing high bills will get that help okay thanks for that Sarah now let's [11:38] move on and talk a little bit about uh flights we've had some questions about fuel shortages [11:43] and their impact on flights will flights be cancelled because of jet fuel shortages well [11:47] a bit of context Miriam there have been some cancellations of flights in Asia in Vietnam [11:51] and the Philippines and 40 of the UK's jet fuel does come via the Strait of Hormuz and Michael [11:58] O'Leary who's of course the boss of Ryanair has warned that if the war continues we do run the [12:03] risk of supply disruptions in Europe in May and June however the government has said that jet fuel [12:09] shipments are continuing to arrive in the UK and stressing the diversity of places where the UK gets [12:16] it from so the government is saying no need to panic look I think this comes down to like a lot [12:20] of these questions just how long this goes on for there are reserves there is fuel in the pipeline [12:26] so to speak and there's no need to panic but if this goes on for many more months that it's not [12:33] fine that there could have to be cancellations of flights because of course planes can't fly if [12:37] they don't have the fuel and we import a great deal of the jet fuel that our Airlines use what [12:43] about food do you think food prices are going to go up that's a question many people are asking sure [12:47] I mean there's been a warning today from the Food and Drink Federation that it previously expected [12:52] food inflation to come down to about three and a half percent by the end of the year now it expects [12:57] it to rise to nine percent by the end of the year but a context here about a third of the world's [13:03] markets come via the straits of Hormuz and if they are restricted yields will go down and food prices [13:08] will go up and also food production in the UK is pretty energy intensive so all that oil and gas [13:14] which goes into making them if that goes up in price you'd expect the food price to go up and [13:18] that's the link the the Lobby group and the trade group are are making bear in mind nine percent is [13:24] high but it's not as high as the almost 20 it got to in 2023 after the Russian invasion of Ukraine [13:33] are house prices falling that's another question that's been sent to us from quite a few people [13:37] well there are different ways to measure what's happening to house prices different indices but [13:42] if we look at the land registry one which is the kind of most comprehensive and official one that's [13:46] actually showing that in January house prices had fallen by 0.3 percent up about a percent overall [13:51] in the year you know house prices are affected by so many things confidence is quite nebulous people [13:56] can feel very confident when the news isn't great around them and suddenly that changes obviously [14:01] also affected by mortgage crop [14:03] costs and we have seen the price of fixed rate mortgages new deals obviously increasing quite a [14:09] lot over the recent sort of weeks so I think depending on what happens in terms of the [14:14] mortgage market and depending on how confident people feel about being able to pay their other [14:19] bills we could see house prices falling a bit further or starting to fall more but it's quite [14:26] difficult to predict what the what the longer term effect could be because as we've been discussing [14:31] there are so many questions about how long this [14:33] conflict could go on on for and what that could mean in the longer term to inflation and therefore [14:38] the interest rates are set by the Bank of England indeed indeed always difficult to predict and a [14:43] final question Ben for you from Gareth who is a viewer he says the real issue that needs addressing [14:48] is the UK's vulnerability to outside influences and its heavy reliance on imported fuel what [14:53] happened to the UK being self-sufficient well I think the truth is that self-sufficiency when it [14:59] comes to fuel and many other things as well Mariam is a little bit of a Mirage as I was [15:03] with you earlier the UK produces quite a lot of oil but because of the nature of our refineries [15:07] we also import a lot of oil to turn that into petrol I think it is worth on the issue of [15:13] self-sufficiency thinking about the United States because they are a big energy producer a very big [15:18] net energy exporter so if self-sufficiency meant low prices you'd expect them to be doing pretty [15:24] well at the moment but the reality is as we've been talking about in other places US gas prices [15:30] are going up because the US is part of a global energy market [15:33] fuel prices and oil prices when they go up globally they also affect the United States [15:38] despite it being a net exporter so self-sufficiency doesn't necessarily give you what you want which is [15:44] price stability and I think that's very important to bear in mind just how interconnected we all are [15:50] in this globalized economy and how these shocks affect all of us no matter how self-sufficient we [15:55] are on paper fantastic final thought there Ben thank you very much Indy for that and Sarah [16:03] to all of the viewers who've been sending questions to BBC Your Voice. [16:07] Fantastic.