Plummeting pound will add up to £3 on the cost of a tank of petrol or diesel
THE plummeting pound is fuelling high costs at the pump, despite a fall in the wholesale price of petrol and diesel.
If the pound reaches parity with the US dollar, the cost of filling up the average tank will rise by £3.
The pound fell to its lowest level against the dollar since decimalisation in 1971.
Sterling fell by more than 4% to just $1.03 on Monday, before recovering to $1.08 this afternoon - but it's still bad news for drivers.
And has shown how the falling value of the pound will hit driver's back pockets, even when petrol and diesel prices are down on last week.
Figures published by the Department for Business, Energy and Industrial Strategy show a litre of petrol cost an average of 163.75p on Monday, while diesel was 180.31p per litre.
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A weak pound is already adding almost a fiver more to each tank of fuel when filling up at the pumps, according to the AA.
Luke Bosdet, the AA’s fuel price spokesman previously told The Sun how: "The influence of the exchange rate is often overlooked when drivers compare oil price movements with those at the pump.";
The pound was worth $1.35 against the dollar earlier this year, but has since plunged and sits at $1.08 today.
But because petrol and diesel is bought in US dollars, the pound is now buying less.
And if the pound reaches parity with the US dollar it'll cost an additional £3 a tank when filling up.
Petrol is usually purchased by the tonne.
Right now, it costs $900 per tonne and with the pound worth $1.08 this converts to 63p per litre before VAT and fixed fuel duty is added.
But if the pound falls to $1, the price could rise to 68p per litre before VAT and fixed fuel duty - adding £3 onto the cost of an average full tank.
“Fortunately, wholesale petrol and diesel costs have reduced in recent weeks due to the price of oil coming down which has led to lower prices at the pumps, but if oil were to go back up, the weak pound would definitely lead to drivers paying far more to fill up.”
How can I cut fuel costs?
There are ways to save an extra 5p per litre if you sign up to a major supermarket loyalty schemes.
Esso has partnered with Nectar for its loyalty scheme and you can get 5p off a litre when you swap 300 Nectar points.
Drivers with a BPme rewards card will get one point for every £1 they spend in store or on a litre of regular fuel at a BP garage.
Motorists will get £1 off their fuel or shopping for every 200 points.
Texaco, Shell, Sainsbury's and Tesco loyalty card holders can also get money off their bills.
You can also cut fuel costs by driving more efficiently. This can be achieved by:
These allow you to search prices of UK petrol stations. All you need to do is enter in your postcode and tell it how far you want to travel (up to 20 miles).
It's also so easy to forget about the clutter building up in your car - whether it's tools, kids' toys or general rubbish. But it turns out additional storage space can increase fuel costs by a whopping 12%.
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So, don't forget to do a car clear out every now and then.
And, if you're driving at a slower speed, think about taking the roof rack off and switching off air con to save on running costs.