How UK Fuel Prices Are Set
The number on the pump is not one decision made by one person. It is four components stacked in a row, and only one of them is genuinely up for grabs.
The four parts of every pump price
Every litre you buy is built from four things:
- The wholesale price of the fuel itself: what retailers pay for refined petrol or diesel before it reaches a depot. Global markets set this, not anyone in Britain.
- Fuel duty. A fixed Treasury tax of 52.95p a litre in 2026, identical at every station in the country.
- VAT at 20%, applied to the whole price including the duty. You pay tax on a tax.
- The retailer's margin. A few pence a litre that covers the forecourt's costs, and the only part that varies much between stations.
Worked example: where a 140p litre goes
Say a litre of petrol sells for £1.40. Duty takes 52.95p off the top. VAT is 20% of the pre-VAT price of 116.67p, which works out at 23.33p. Together that is just over 76p in tax before the fuel itself is paid for. The remaining 63.7p covers the wholesale fuel, getting it to the forecourt, and the station's margin.
Nearly half the price is fixed by the government before any retailer gets a say. That is why prices across a whole area tend to move together, and why a 1p move in wholesale costs shows up at the pump within days.
On that 140p litre, tax is 76.3p: 52.95p of duty plus 23.33p of VAT. The other 45.5% has to cover the fuel itself, transport, the biofuel blend, card fees and the forecourt's margin, all from the same litre.
Why wholesale prices move (and why yours follow)
UK retailers buy refined petrol and diesel against Northwest European wholesale benchmarks, and those track crude oil. Wholesale is quoted in pence per litre and it moves every day. When crude rises, pump prices follow within days. When crude falls, the savings drift through more slowly, and that lag is where the gaps between neighbouring forecourts come from.
The government's Fuel Finder scheme, the database this site is built on, obliges retailers to report every price change. What you see here are real forecourt prices, not estimates.
Why is motorway fuel so expensive?
Because you are already committed. Service plazas pay high site rents, face no competition at the exit and price accordingly. The premium typically runs 10p a litre and more: see supermarket vs motorway services prices for the detail.
What is E10, and does it change the price?
Standard UK petrol has been E10 since 2021, blended with up to 10% renewable ethanol. Ethanol carries slightly less energy than petrol, so a tank gets used marginally faster. It does not move the pump price much on its own, but the cost of ethanol does feed into the wholesale mix. Diesel is B7, blended with up to 7% renewable biodiesel.
What you can actually control
Duty, VAT and the global oil price are all out of your hands. What is left is which forecourt you drive onto. In most towns the gap between the dearest and the cheapest station sits around 5 to 10p a litre. Over a 50-litre fill, that is £2.50 to £5 every time.
That gap is the whole reason this site exists. Put a postcode or town in, and use the cheap one.
The fixed parts at a glance (September 2026)
- Duty: 52.95p a litre for petrol and diesel. The 5p cut announced in March 2022 was extended again in May 2026 and currently runs to 31 December 2026. Without it, duty would be 57.95p.
- VAT: 20% on the full pump price, duty included.
- Combined: tax is typically a little over half of every litre you buy.
These rates were confirmed for 2026 and can change at Budgets.