A British Man's Take on Debt, Saving & Investing

Petrol Hedging – Update

Posted on August 30, 2009 by Lee

The RAC has issued a warning to motorists, and I’m not entirely shocked. Sources are reporting that it is expected the price of petrol will rise to £1.20 or more per litre by Christmas. This is not only due to the 2p duty increase, but also the general rising  cost of oil.

So, it’s time to update my hedge from 115.9p to 125.9p as of my next fill, with authority to myself to begin withdrawing from the fund when prices hit £1.20. You may still think “what’s the big deal?” about rising prices, like a lot of my colleagues. “It’s only a few pence” is something I hear regularly. But when you add up the cost over the year, it really does hit your bottom line.  Let me show you:

If you purchase 50 litres a week (an average tankful in an average family car), right now at 104.9p/litre you’d be spending £52.45 at the pump per visit. If this rises to 120.9p, you’d spend £60.45 instead, an £8 increase. That’s an extra £32 a month just filling the car up, which is a staggering £384 a year. Yes per litre it’s “just pennies”, but those pennies soon add up to become a huge amount of real pounds.

You can find some of my tips to reducing your cost of motoring here but the real saving comes from simply using the car less. Walk more, and group your trips to make less journies in total.

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Category Motoring, Tax
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