Brexit set to drive up fuel prices

British motorists are set to see an increase in fuel prices in the wake of Brexit, according to a spokesman from the RAC.

With the value of the British pound having dropped sharply following the result of the EU referendum, the RAC claims the price of fuel could rise by 2p per litre in the coming days.

Simon Williams, the RAC's spokesman for fuel, reined in initial, more negative forecasts which predicted a sharper rise in the price of petrol and diesel. However, he maintained the prediction that fuel prices would rise, albeit less sharply: “As it is, we may well see forecourt prices go up by a penny or two from the current average prices for both petrol and diesel of 112p a litre, but we should remember that a year ago a litre of unleaded was 5p more expensive and diesel was 9p dearer." 

“No doubt there will be more volatility in the coming weeks, but for the time being at least motorists should not see an impact on the cost of filling up.”

Williams explained that while the exchange rate is an important factor in determining the price of fuel at the pumps, "the associated fall in the price of crude oil due to fears of weaker global demand has softened the effect on wholesale fuel prices. Had the barrel price stayed constant, the falling pound would have caused wholesale prices to rise sharply".

The price of a barrel of crude oil hit $50 at the start of June 2016; the highest it's been since Autumn of last year. It fell to $49 in time for the referendum, and fell again to just below $46 on the week after the vote. Williams said this had lessened impact on the price of fuel, which would have otherwise risen more sharply.

The motor industry had its say pre and post-referendum, but industry experts are already predicting a slump in new car sales as a result of the outcome.