Market Loop - ⛽Petrol prices near record high

ECONOMY
Petrol prices near record high

What’s going on?
The price of petrol has reached £1.40 a litre, the highest since September 2012, and just 3p shy of the all-time high from April that same year. 

Why is this important?

Petrol prices have now gone up by over 20% in one year, the main culprit is the doubling in the cost of a barrel of crude oil to $83. Industry experts predict oil could rise to as much as $90 by Christmas.

The £1.40 price of petrol breaks down into three parts: 

The rising demand for oil has been caused by the reopening of economies post lockdown. It comes at a time when households are already facing pressure from rising gas and food prices because of a host of supply chain issues. 

The rising cost of goods and services aka inflation could prompt the Bank of England to raise interest rates to bring it under control.

Takeaway
Soaring prices is becoming an all too familiar story. There have been calls for the government to do more to help households facing rising bills.

Global oil prices are outside of the government’s control but cutting VAT and fuel duty would go along way to reducing the price at the pumps.

But tax rises rather than cuts have been on the agenda recently as the government looks to repay the billions borrowed for pandemic-related support schemes.

TRANSPORT
Gov plans relaxation of foreign lorry driver rules

In a bid to ease the supply chain problems caused by the chronic lack of lorry drivers, the UK government is planning to make it easier for foreign drivers to deliver more goods.

Currently under rules known as cabotage, foreign drivers can only do two cabotage trips in a two week period before returning home.

For example, if a Polish driver brought goods to the UK and unloaded them, then collected a new load in York that was transported to London, the second journey would be a cabotage leg.

The rule was put in place to protect domestic haulage companies from being undercut by mostly Eastern European drivers who have lower costs.

Under the government’s plans there would be a temporary suspension of the rules so that foreign drivers could do an unlimited number of cabotage trips in a fortnight.

The government hopes that this will help to ease some product shortages, especially in the run-up to the crucial Christmas trading period. 

It’s part of wider measures introduced to tackle the estimated 100,000 shortfall of lorry drivers in the UK. The government had announced it would grant 5,000 visas to foreign drivers but so far only 127 have been issued.