Since the start of the conflict in the Middle East, the price of diesel at the pumps has increased from around £1.42 – the average price before the conflict – to £1.90 at the start of May What is happening to UK fuel and petrol prices? – BBC News By comparison, at the height of the concerns over the Ukraine conflict, the price of diesel peaked at just under £2 per litre.

So, could the pump price charged for diesel fuel in 2026 go even higher than the price witnessed in 2022? As I write this, on the 3^rd May 2026, it seems quite possible, and even probably that this will be the case: hopefully, I am proved wrong.

The increase in the price of fuel, the rise in the minimum wage, and other cost pressures due to inflation still being above the Bank of England’s target figure of 2%, will be bad news for those local authorities with significant transport bill for conveying pupils to and from schools, either for SEND or because their pupils live in rural areas beyond the two or three mile distance, historically seen as the distance where it is reasonable for parents to pay to ensure children attend their nearest school.  

Although fuel costs are not as high a proportion of total transport costs as are wages, an increase of a third in fuel prices is going to have an impact on transport contracts being negotiated for the new school year starting in September 2026.

A council with a £40 million education transport bill, not unreasonable for a large rural shire county, might see a 5-10% extra charge. This translated to £2-4 million extra across a council’s financial year, and likely even more across a school-year if prices continue to rise further.

 The risk is that some operators might well collapse under the price increase, especially if they are in fixed price contracts with a local authority, leaving a seller’s market, as operators will know that pupils must be transported to school.  Could this outcome drive prices even higher?

How will local authorities cope with these prices increases? Those with reserves, will draw on them until the next round of council tax rate setting in February 2027. However, many local authorities don’t have large reserves, and with local government reorganisation looming for the rural areas, running up a deficit may not be possible.

What remains is either cuts to other services or a government bailout to cover the extra cost of fuel. With social care, and adult social care especially, taking the lion’s share of the budgets of rural counties, there may be few services where cuts are possible, especially since adult social care can involve its own significant fuel costs associated with ‘care in the community’.  

Protecting services such as the youth service and the funding for under-fives could be at risk if local authorities have to bear the brunt of transport related cost increases, especially since the war started just at the wrong time for local government financing, when budgets for 2026-27 were already finalised.

With so many different political parties now in charge, it will be interesting to see how they approach this problem, and who is asked to take the consequences.