June 22, 2022
Why is Petrol so Expensive in the UK in 2022?
Table of contents
Key Features to Look for in an
Investment App for Beginners in the UK
Investment App for Beginners in the UK
Introduction
It is now more expensive than ever to fill up your car. But why?
Introduction
Most of us will remember clearly feeling shocked when petrol passed £1/litre over a decade ago. Since then, UK drivers have only seen the cost of fuel drop below that once since the 2008-2009 financial crisis.
Despite the advent of electric vehicles and the European push for all electric-road use by 2035, the truth is that the majority of cars in the UK are still ICE (internal combustion engine) powered.
The gradual rise in costs has reached its apotheosis in 2022, with costs having spiralled completely out of control. Reports from the RAC suggest that the average petrol price is now 186.5p/litre, with it now costing more than £100 to fill up the average family car for the first time ever.
Given that fuel is one of the largest non-housing costs that make up an average family expenditure, this has significant knock on effects for personal wellbeing, especially given economic difficulties elsewhere. The stock market is having its worst start to the year since 1939.
So why is petrol so expensive in the UK in 2022? There are a few reasons for this, and we will discuss them in this blog post.
The high cost of oil
One simple answer is the high cost of oil, which is the most significant factor in the price of petrol. The price of a barrel of Brent crude oil, the international benchmark, has more than doubled since 2020. It now costs over $100 a barrel. This is due to a variety of factors, including:
- The pandemic: global oil demand fell sharply in 2020 as a result of businesses closing or reducing capacity amid the Covid-19 pandemic, leading to a fall in prices. However, demand has since recovered and is now close to pre-pandemic levels.
- OPEC+: The Organization of the Petroleum Exporting Countries (OPEC) and other major producers, known collectively as OPEC+, have been limiting production since 2017 in order to support prices. This also happens on a micro scale. Petrol retailers don't always pass on the savings to consumers, keeping prices unnecessarily high to take extra profits. The RAC succinctly describe this as "rising like a rocket and falling like a feather."
- US shale oil: US production has fallen sharply in recent months as a result of the pandemic and low oil prices.
All of these factors have contributed to the high cost of oil, which is passed on to consumers in the form of higher petrol prices. Furthermore, oil is priced in USD, and the pound is very against the dollar at the moment, meaning our pounds stretch less far than they did before in USD terms.
Taxes and levies
The other significant factor in why petrol is so expensive in the UK in 2022 is taxes and levies. The UK government imposes a tax on every litre of fuel sold, known as Fuel Duty. This currently stands at 57.95 pence per litre. In addition to this, there is also a levy known as the Climate Change Levy (CCL), which is charged on all fossil fuels used by businesses. The CCL currently stands at 26.43 pence per litre of petrol. A period of austerity to alleviate a potential recession may see further increases in taxes, especially given the proportion of cars that are electric and hence exempt (although for how much longer we can only guess).
These taxes and levies make up a significant proportion of the price of petrol, and are one of the main reasons why it is so expensive in the UK. It has always been significantly more expensive than the US, but now more noticeable than ever.
Limited refinery capacity
Another factor that contributes to the high price of petrol is limited refinery capacity. The UK has a total refining capacity of around 45 million tonnes per year, but most of this is dedicated to producing diesel and other fuels, with only around 15% being used for petrol. This means that there is very little spare capacity to meet unexpected increases in demand, which can lead to shortages and price hikes.
The rise of electric vehicles
The fourth factor that we will discuss is the rise of electric vehicles. While electric vehicles make up a small proportion of total car sales at the moment, they are increasing in popularity every year. This is due to a number of factors, including falling prices, government incentives and concerns about climate change. This reduces the top line for both petrol itself and ICE vehicles, having knock on effects for projections and costs moving forward.
Geopolitical tensions in the Middle East
As we have seen, there are a number of factors that have contributed to the high price of petrol in the UK. However, one factor that is often overlooked is geopolitical tensions in the Middle East. This is one of the world's most important oil-producing regions, and any unrest here can lead to supply disruptions and higher prices.
The current situation in the Middle East is particularly unstable, with tensions between Iran and Saudi Arabia, as well as the ongoing conflict in Yemen. This means that there is a risk of further supply disruptions in the region, which could lead to even higher prices.
Wrapping Up
So there you have it: a brief explanation of why petrol is so expensive in the UK in 2022. Unfortunately the reasoning isn't much consolation: your next trip to the petrol station will likely be a costly one and there's no escaping that. However, from a financial point of view this makes it even more important to factor in increased costs to your budget forecasts for the remainder of the year, especially given the tough economic circumstances elsewhere.
Why Use Investing Apps in the UK
The UK has seen a boom in investing apps in recent years, which offer beginner investors an easy to use and accessible option to get into the market.
Investing is now simpler than ever thanks to these applications, which get rid of the need for pricy brokers or complicated procedures. Investing apps like Trading 212, Freetrade, and Revolut make it possible for young and beginner investors to take control of their investments with their user friendly interfaces, built in educational tools and minimal or no costs.
As the need for low cost investing options and financial independence continues to grow, the UK is expected to utilise mobile investing tools even more in 2025. More people in the UK are using apps to manage their money as a result of its adaptability, simplicity of use, and the growing trend towards digital financial solutions and increased awareness of personal financial planning, which makes investing apps an effective tool for beginner investors.
Investing is now simpler than ever thanks to these applications, which get rid of the need for pricy brokers or complicated procedures. Investing apps like Trading 212, Freetrade, and Revolut make it possible for young and beginner investors to take control of their investments with their user friendly interfaces, built in educational tools and minimal or no costs.
As the need for low cost investing options and financial independence continues to grow, the UK is expected to utilise mobile investing tools even more in 2025. More people in the UK are using apps to manage their money as a result of its adaptability, simplicity of use, and the growing trend towards digital financial solutions and increased awareness of personal financial planning, which makes investing apps an effective tool for beginner investors.
Benefits of Using Investing Apps for Beginners
There are a number of advantages to using investing apps for beginners, particularly for those who are just getting started. Here are a few main benefits:
- Accessibility - By providing a straightforward, mobile friendly platform that is available at anytime and from any location, investing apps have completely changed how individuals invest. You no longer have to spend hours learning complicated systems or setting up sessions with financial experts. Beginners can begin investing directly from their smartphones with a few taps. Anyone, regardless of their schedule or location, can participate in investing without any obstacles thanks to this immediate access.
- Low cost - The affordability of investment apps is one of their most notable benefits. The high commissions and administration costs associated with traditional broking services make it challenging for those starting out to invest small amounts of money. On the other hand, a lot of investment apps provide cheap fees or commission free trading, which makes them perfect for beginners. This enables beginners to invest without fear of losing a significant amount of their profits to fees, allowing them to give more money to the market.
- Adaptability - Traditional investment strategies are not as flexible as investing apps. Beginners can more easily dabble without making a significant upfront payment because many investment platforms enable users to invest in a variety of assets, stocks and shares, exchange traded funds (ETFs), and specialised investment options, allowing beginners in the UK to diversify their investment portfolios right away. Furthermore, everyday investors may manage their investments on their own terms and are not restricted to a 9 to 5 schedule thanks to the option to trade at any time and from any location.
Investment apps are a great place for beginner investors to start because they combine low-cost solutions, user friendliness, and convenience to help gradually increase wealth.
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Key Features to Look for in an Investment App for Beginners in the UK
It's crucial to search for features that can features that can facilitate your learning and make investing simple and accessible when selecting an investment app as a beginner. Here are some essential features to look out for:
- East to use interface
The design of the app should be simple and intuitive. You will find it easier to comprehend and utilise the platform without feeling overwhelmed if it has a straightforward and uncomplicated layout. - Educational Resources
The best investment apps include educational materials such as FAQs, videos, tutorials, and articles. Beginner investors can use as a guide to understand important investment strategies and make wise choices. - Platform fees
A lot of investment apps charge management fees and trading fees. To protect your investment gains, it's crucial for beginners to select an investment app with little to no costs. The best investment apps waive management fees or provide zero commission trading. - Low minimum investment
For beginners who might not have a large initial investment, apps that let you start investing with small amounts of money are excellent. Also look for apps that sell fractional shares, so you can invest in pricey stocks without having to purchase the entire share. - Portfolio diversification tools
Seek for investment apps that provide a variety of investment options, including mutual funds, index funds, and exchange traded funds (ETFs). Even with little money you can create a diversified portfolio by making a fractional investment in individual stocks. - Robo-Advisor Features
Some investment apps include robo-advisors which automatically manage your investment portfolio according to your goals and risk tolerance. For those whose may not feel comfortable choosing their own investments, this is a fantastic benefit. - Security features
It is important to ensure that the app has strong security features like encryption, two-factor authentication, and safe account recovery methods to protect personal data and information. - Current market data
The best investment apps have real time market data, charts and stock market performance metrics which are essential for beginners who wish to remain informed and make wise judgements. - Type of investment accounts
There are many types of investment accounts available, such as investment accounts for minors, individual retirement accounts and individual taxable accounts. You should choose an investment app that provides you with a range of account options that can help meet your financial objectives.
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