Fuel prices should drop by 5p per litre (or about £3 per tank) from 6pm on 23rd March 2022
The Chancellor has today announced a 5p per litre cut in fuel duty, meaning petrol and diesel prices should drop by 5p per litre from 6pm on Wednesday 23 March 2022. This reduction in duty will last until March 2023.
Chancellor Rishi Sunak claims this is “the biggest cut to all fuel duty rates ever”, and it should help lessen the impact of rising living costs on motorists.
But what impact will it really have on your wallet?
The RAC claims this drop in fuel duty should mean you pay £3.30 less to fill up the average family car with a 55-litre fuel tank. At the time of writing (23 March 2022) the average price of petrol was £1.67, and £1.79 for a litre of diesel. These should both drop by 5p tonight, to £1.62 and £1.74 respectively.
Why are UK fuel prices so high?
March 2022 has seen record-high fuel prices – up more than 40p per litre compared to the start of 2021. Diesel is up nearly 50p per litre. Price rises were compounded by the ongoing war in Ukraine, and despite the UK importing just 5% of its oil from Russia before the conflict, there’s been a knock-on global rise as a result of the war.
What is fuel duty?
Fuel duty is a tax on fuel levied by the Government. The price you pay for fuel at a pump is made up of several components: the wholesale cost of the fuel itself (about 33% of the price you pay), fuel duty (about 35%), the fuel retailer’s margins (around 8%) and VAT at 17%.
Fuel duty has been frozen since 2011, but was expected to rise soon – today’s cut is only the second cut in the past 20 years.