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Petrol Prices – What are we paying for when we fill up our cars?

Petrol Prices – What are we paying for when we fill up our cars?

When you’re at the petrol station filling up …….your lease vehicle from Rivervale contract hire and leasing of course! you ever wonder what it is you’re paying for?  Why do fuel prices change all the time?  How much are we paying in tax?  Well for all our leasing customers I have the answers ………….


The price of fuel can change for many reasons; these can be market forces such as the cost of oil, inflation and changes in taxes.  Global events can also affect the price of fuel such as war or gas shortages.  In addition new technologies can affect the price with new vehicles and alternative fuel sources.  So with all these variables that make up the price of fuel it’s no wonder it fluctuates so much.


By the time we are filling up we aren’t just paying for the price of oil there are 4 different factors that contribute to the cost.  Two of these are taxes.  Firstly Fuel Duty is applied which is added to the price of petrol before it is sold this tax creates revenue for the government.  As well as tax we also have to pay for the price of the oil and the price of refining that oil to make products such as petrol and diesel.  The price of refining oil into diesel is higher than producing petrol so diesel will always be a little bit more expensive.  The second tax is VAT which is added to the price of fuel once fuel duty and the price of the oil have been combined, this is another tax that creates revenue for the government.  Lastly the tiniest percentage of what you pay goes to the retailer for supplying the fuel to you.


Recently the supermarkets announced a drop in petrol prices just before the bank holiday which made us all give a little cheer!  Petrol prices dropped to a 3 year mid-august average low of 129.72 and diesel dropped to a 3 year low of 133.94p per litre.  However, of the price you are paying at the pumps 61% of the petrol price and 59% of the diesel price is made up of fuel duty and VAT.  It seems high considering without tax the UK has the 5th cheapest diesel and 2nd cheapest petrol of all the EU…….so how fast are fuel prices dropping in the EU?  Take a look …….


Pre-tax cost of petrol in Europe

(Source:AA latest news)

(price per litre)

7 July

11 August



Austria (€)





Belgium (€)





France (€)










Italy (€)





Netherlands (€)





Spain (€)





UK (£)






So you can see we are trailing behind compared to the drops seen across the EU.  France are enjoying a 5% drop in price and the Netherlands are enjoying a massive 6.6% drop   While here in the UK we have the 2nd highest pump price for diesel and the 9th highest for petrol.

We know the price of petrol and diesel is only taking a brief dip in price and will inevitable just go up and keep going so why not have a look at our tips on how to save money on fuel,  our guide to petrol alternatives or a look at electric cars for all our leasing customers!   We know fuel prices are a major concern for most motorists.  At you can see the latest fuel prices, type in how much you’ve spent at the pumps to see how much of your money was spent on tax and also join the petition to stop tax on tax, to stop VAT being added on top of fuel tax to the price of your fuel!

Not ready to part ways with petrol or ditch the diesel yet?  Then find the most economic cars you can that will give you ultra-low emissions and high mpg, such as the Peugeot BlueHDi 1.6 that will give you 91.1mpg and has low emissions of 82g/km so already passes the Euro 6 rating.  Or if you need something a bit bigger how about the Skoda Octavia 1.6 TDI CR Greenline that will still give you an impressive 88.3mpg with low CO2 emissions of 85g/km!

The comments above do not necessarily reflect Rivervale's views unless clearly stated.

Car related news
26 August 2014
Written by Rivervale
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