Fluctuating fuel prices are not ideal for businesses managing their finances. Uncertainty can prevent a business from accurately forecasting costs, disrupt cash flow, and eat into profit margins. However, there is a simpler way. By switching to fuel cards from Cambrian Fuelcard Services Ltd, you can have a fixed weekly price, which means you can ignore the pump price and use the price we quote you on a Friday.
A litre of fuel generally comprises 6 components: manufacturer costs, retailers’ profit margins, government taxes (VAT & fuel duty), bio content, and delivery and oil company costs.
RAC Fuel Watch recently broke down the cost of a litre of fuel, and the difference between diesel and petrol is shown in the illustrations below.
Breakdown of a Litre of Petrol
These figures are a rough estimate, and while fuel duty and VAT are static costs, wholesale petrol costs can fluctuate massively.
Breakdown of a Litre of Diesel
Again, as with petrol, there are several static costs, including fuel duty and VAT, and the wholesale cost and refining of diesel can affect the price per litre.
Why do Fuel Prices Fluctuate?
The price of oil plays a leading role in determining the cost of fuel. Global events, including Russia’s invasion of Ukraine and ongoing conflicts in the Middle East, can create uncertainty in the oil market and lead to significant increases in fuel prices. Other factors can also impact prices, such as currency fluctuations, with a weaker pound against the US dollar making oil more expensive as it is traded in USD.
Fuel Duty
Fuel Duty is a fixed charge applied to every litre of fuel purchased. It currently stands at 52.95p per litre. In 2022, the government reduced the rate by 5p per litre following significant increases in fuel prices caused by the invasion of Ukraine.
Earlier in 2026, the government announced that the 5p cut in fuel duty would be gradually restored. This was due to begin in September 2026. However, due to the current issues in the Middle East, this has been delayed until January 2027. In January 2027, the plan is to increase fuel duty by 3ppl, taking it to 55.95p, and by March 2027, fuel duty will cost 57.95ppl, completely ending the 5p reduction.
Why is VAT 17%?
In the UK, VAT is a flat-rate tax of 20%; with fuel, it works slightly differently. The 20% VAT is applied after fuel duty has been added. Because fuel duty is included in the price of a litre of fuel, VAT is added afterwards. What this does mean, however, is that drivers end up paying tax on tax!
How Can I Manage my Business with Fuel Fluctuations?
We understand that fuel price fluctuations can affect businesses, especially when it comes to managing these price changes on an almost daily basis! There is a simpler way, though. A fuel card with Cambrian Fuelcard Services Ltd offers you a fixed weekly price at over 8,000 stations in the UK. With a choice of 7 fuel cards from 8 different suppliers, there will be a fuel card to suit your business needs.
Closing Thoughts
Fuel prices are challenging for businesses, which can make it harder for them to predict expenditure and manage budgets effectively. While factors such as oil prices and global events are out of businesses’ control, you can make fuel spending more predictable. A fuel card from Cambrian Fuelcard Services Ltd provides you with a fixed weekly price across thousands of UK fuel stations, keeping your business moving without worrying about the daily pump price changes.
To apply for a fuel card with us today, click here.
To find out more about our range of fuel cards, click here.
Click here to learn more about Cambrian Fuelcard Services.
