In July 2008, crude oil hit $147 a barrel — the highest price ever recorded. A litre of petrol at UK pumps cost 119p. Fast forward to September 2026: oil is around $94 a barrel — 36% cheaper than that 2008 peak. Yet diesel costs 191p a litre — 60% more than in 2008. Petrol is 168p — also well above the 2008 level. How is it possible that oil is cheaper, yet fuel costs far more? The answer is tax. This page shows exactly where your money goes, going all the way back to 1979 when a litre cost 22p.
Oil $147 in 2008, Petrol 119p. Oil $94 in 2026, Diesel 191p. Why?
July 2008 — Oil at Record High
September 2026 — Oil Cheaper, Fuel More Expensive
⚠️ The paradox has three parts. First, the pound has weakened significantly since 2008 — when oil was $147, that translated to approximately £73 per barrel at the time. Today at $94 and a weaker pound, that translates to about £74 per barrel — almost identical in sterling terms. Second, fuel duty is a flat tax per litre — it does not fall when oil prices fall. In 2008, duty was 50p on a 119p litre (42%). Now duty is 53p on a 168p litre (31%). The duty hasn't changed much, but the pre-tax cost has risen with sterling weakness and refining costs. Third, retailer margins have widened — the Competition and Markets Authority found in 2023 that margins increased significantly from pre-pandemic levels and have not fully corrected.
Where Your Money Goes Right Now — Every Penny of a Litre
On every litre of petrol (168p) and diesel (191p) you buy in September 2026, here is the precise breakdown of where the money goes:
Government total: 80.95p (48.1%) — the single biggest slice
Government total: 84.75p (44.5%) — diesel rising fast toward £2
UK Pump Prices, Fuel Duty and Tax Share — Every Year 1979 to 2026
Sources: Hansard 1996 (exact government figures for 1979-1996), DESNZ Quarterly Energy Prices, RAC Fuel Watch, BEIS statistics, House of Commons Library. Fuel duty figures sourced from HMRC historical tables and House of Commons Library briefings. Tax % is approximate — it rises when pre-tax fuel costs fall and falls when pre-tax costs rise, because duty is flat.
| Year | Key Event | Crude Oil $/bbl | Petrol p/litre | Diesel p/litre | Fuel Duty p/litre | VAT % | Total Tax p/litre | Tax % of Pump Price |
|---|---|---|---|---|---|---|---|---|
| 1979 | Thatcher elected; oil shock | ~$30 | 22.7 | 23.7 | ~8 | 8% | ~10 | 44% |
| 1980 | Iranian revolution aftermath | ~$36 | 28.3 | 29.7 | ~10 | 15% | ~14 | 49% |
| 1981 | UK recession; VAT already 15% | ~$35 | 34.3 | 34.0 | ~13 | 15% | ~18 | 52% |
| 1982 | Falklands; oil price easing | ~$33 | 36.6 | 35.9 | ~14 | 15% | ~20 | 55% |
| 1983 | Economy recovering | ~$29 | 39.3 | 37.3 | ~16 | 15% | ~21 | 54% |
| 1984 | Miners' strike | ~$28 | 40.6 | 38.3 | ~17 | 15% | ~22 | 54% |
| 1985 | Soviet reforms; oil supply push | ~$27 | 43.1 | 41.9 | ~18 | 15% | ~24 | 56% |
| 1986 | Oil price collapse — Saudi flooding market | ~$14 | 37.4 | 35.6 | ~18 | 15% | ~22 | 59% |
| 1987 | Post-crash; oil depressed | ~$18 | 37.9 | 34.6 | ~18 | 15% | ~22 | 58% |
| 1988 | Piper Alpha disaster; Lawson boom | ~$15 | 37.4 | 34.0 | ~18 | 15% | ~22 | 59% |
| 1989 | Exxon Valdez spill | ~$18 | 40.4 | 36.2 | ~20 | 15% | ~24 | 59% |
| 1990 | Gulf War — Iraq invades Kuwait | ~$24 | 44.9 | 40.5 | ~22 | 15% | ~27 | 60% |
| 1991 | Gulf War ends; oil price falls | ~$20 | 48.5 | 43.8 | ~24 | 17.5% | ~30 | 62% |
| 1992 | Black Wednesday; recession | ~$19 | 50.3 | 45.0 | ~26 | 17.5% | ~32 | 64% |
| 1993 | ⚠️ Fuel duty ESCALATOR introduced — 3% above inflation per year | ~$17 | 54.1 | 49.2 | ~29 | 17.5% | ~35 | 65% |
| 1994 | Escalator raising duty rapidly | ~$16 | 56.9 | 51.5 | ~31 | 17.5% | ~38 | 67% |
| 1995 | Major government; escalator at 5% | ~$17 | 59.8 | 54.2 | ~35 | 17.5% | ~42 | 70% |
| 1996 | Labour opposition fury at escalator | ~$22 | 60.9 | 56.9 | ~38 | 17.5% | ~45 | 74% |
| 1997 | Blair elected; Brown raises escalator to 6% | ~$19 | 63.6 | 60.2 | ~40 | 17.5% | ~48 | 75% |
| 1998 | Asian financial crisis; oil $10/bbl briefly | ~$13 | 66.0 | 63.5 | ~43 | 17.5% | ~52 | 79% |
| 1999 | Oil recovery; OPEC cuts | ~$18 | 70.9 | 68.0 | ~47 | 17.5% | ~56 | 79% |
| 2000 | 🚛 FUEL CRISIS — lorry blockades; escalator scrapped | ~$28 | 82.7 | 81.3 | ~48 | 17.5% | ~62 | 75% |
| 2001 | 9/11; oil demand collapse | ~$25 | 79.2 | 77.1 | ~47 | 17.5% | ~58 | 73% |
| 2002 | Iraq war build-up | ~$25 | 74.9 | 73.3 | ~45 | 17.5% | ~56 | 75% |
| 2003 | Iraq war; oil rising | ~$29 | 77.2 | 74.7 | ~46 | 17.5% | ~57 | 74% |
| 2004 | China demand; Yukos crisis | ~$38 | 80.0 | 78.4 | ~47 | 17.5% | ~58 | 73% |
| 2005 | Katrina hurricane; $70 oil | ~$55 | 87.4 | 85.2 | ~48 | 17.5% | ~60 | 69% |
| 2006 | Strong demand; $65-78 oil | ~$66 | 90.2 | 89.0 | ~48 | 17.5% | ~62 | 69% |
| 2007 | Subprime crisis begins; $72-99 oil | ~$72 | 94.1 | 93.8 | ~50 | 17.5% | ~65 | 69% |
| 2008 | 🛢️ OIL AT $147 RECORD — petrol 119p peak; crash to $40 | $97 avg ($147 peak) | 108 | 118 | ~50 | 17.5% | ~67 | 62% |
| 2009 | Financial crisis; oil $40-80; VAT cut to 15% | ~$62 | 101 | 103 | ~54 | 15-17.5% | ~67 | 66% |
| 2010 | Recovery; Arab Spring fears; VAT back to 17.5% | ~$79 | 120 | 120 | ~57 | 17.5% | ~79 | 66% |
| 2011 | VAT rises to 20%; duty cut 1p; Arab Spring $127 oil | ~$111 | 135 | 138 | ~57.95 | 20% | ~84 | 62% |
| 2012 | Record petrol 138p Apr; duty frozen | ~$112 | 136 | 142 | ~57.95 | 20% | ~85 | 63% |
| 2013 | Duty frozen; highest petrol annual avg | ~$109 | 134 | 141 | 57.95 | 20% | ~84 | 63% |
| 2014 | Oil falling from Q3 | ~$99 | 128 | 134 | 57.95 | 20% | ~82 | 64% |
| 2015 | Oil collapse — Saudi vs shale war; $35-60 oil | ~$53 | 110 | 112 | 57.95 | 20% | ~78 | 71% |
| 2016 | Oil $27 Jan low; OPEC deal Q4 | ~$44 | 103 | 103 | 57.95 | 20% | ~76 | 74% |
| 2017 | Recovery; pound weak post-Brexit vote | ~$54 | 117 | 120 | 57.95 | 20% | ~79 | 68% |
| 2018 | Oil rising; Iran sanctions; £1.30 max | ~$71 | 126 | 130 | 57.95 | 20% | ~81 | 64% |
| 2019 | US-China trade war; modest oil | ~$64 | 128 | 132 | 57.95 | 20% | ~81 | 63% |
| 2020 | COVID — oil briefly negative; lowest pump prices since 2016 | ~$42 | 104 | 108 | 57.95 | 20% | ~76 | 73% |
| 2021 | Recovery demand surge; petrol record 149.9p Oct | ~$71 | 137 | 143 | 57.95 | 20% | ~84 | 61% |
| 2022 | 🇷🇺 Russia invades Ukraine; petrol >190p; duty cut 5p to 52.95p | ~$101 | 168 | 185 | 52.95 | 20% | ~84 | 50% |
| 2023 | Prices easing; duty freeze continues | ~$83 | 149 | 155 | 52.95 | 20% | ~80 | 54% |
| 2024 | Middle East tensions; OPEC cuts | ~$80 | 148 | 156 | 52.95 | 20% | ~80 | 54% |
| 2025 | Feb: lowest since 2021; 130-145p | ~$75 | 137 | 141 | 52.95 | 20% | ~77 | 56% |
| Sep 2026 | ⚡ Middle East conflict; Saudi pipeline suspended; diesel →£2 | ~$94 | 168 | 191 | 52.95 | 20% | ~80-85 | 48-45% |
Hansard data (1979-1996) sourced from Parliament records (Written Answers 11 December 1996). Post-1996 data: DESNZ Quarterly Energy Prices, RAC Fuel Watch, House of Commons Library SN04712. Crude oil price is annual average Brent crude in USD. Fuel duty figures from HMRC. Tax % is approximate — exact figure varies with oil price and pound. Milestone rows highlighted.
The Full Picture — Price and Tax Share Since 1979
What a Year of Driving Costs You — and How Much Is Tax
The average UK car travels approximately 7,400 miles per year. At typical fuel economy of around 40 miles per gallon (8.8 miles per litre), that requires approximately 840 litres of petrol annually.
| Year | Petrol price p/l | Annual fuel cost (840 litres) | Tax paid | Oil company + retailer | Tax % |
|---|---|---|---|---|---|
| 1979 | 22.7p | £191 | £84 | £107 | 44% |
| 1985 | 43.1p | £362 | £203 | £159 | 56% |
| 1990 | 44.9p | £377 | £226 | £151 | 60% |
| 1995 | 59.8p | £502 | £351 | £151 | 70% |
| 2000 | 82.7p | £695 | £521 | £174 | 75% |
| 2005 | 87.4p | £734 | £507 | £227 | 69% |
| 2008 | 108p | £907 | £563 | £344 | 62% |
| 2012 | 136p | £1,142 | £714 | £428 | 63% |
| 2015 | 110p | £924 | £657 | £267 | 71% |
| 2019 | 128p | £1,075 | £681 | £394 | 63% |
| 2022 | 168p | £1,411 | £706 | £705 | 50% |
| 2026 | 168p | £1,411 | £679 | £732 | 48% |