Coronavirus: UK unlikely to see fuel drop below £1 despite oil market crash

Published 22 April 2020

The global oil market has crashed in recent days, but you're unlikely to see that translate into cheaper fuel in the UK at the pumps. Here's why.

Negative oil prices in the USA effectively means some traders are being paid to take oil off the hands of producers due to limited storage. That's because oil refineries are running out of places to store oil as demand dries up amid the coronavirus outbreak.

With hundreds of millions of people around the world staying home to stop the spread of Covid-19, travel is nearly nonexistent. In fact, unless you're an essential worker - or you need to undertake essential travel for things like food and medicine - the Government has asked UK residents to do their part by staying at home.

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The price of Brent crude, used as a benchmark for setting fuel prices has fallen below $20 a barrel for the first time since 2002, prompting calls for retailers to drop their forecourt prices to reflect the crash.

The FairFuelUK campaign group has accused oil companies of profiteering during the crisis and withholding wholesale savings. It believes the average cost for petrol and diesel should be around 98p-per-litre and 106p - 10p per litre lower than their current levels.

In a statement on its website, FairFuelUK said: "Greedy oil corporations are not only failing to pass on the massive wholesale falls in petrol and diesel to UK logistics businesses, essential workers and those who have to drive, they are also failing to help small independent garages they supply to get through this crisis."

"Financially stretched small independent fuel forecourts have contacted FairFuelUK saying, they might not be able to cover their operational expenses due to low fuel sales and could be forced to close for good."

The news follows the 3 April announcement that the price of crude oil had fallen by 66 per cent, to under $18, its lowest level in 18 years. This was due to a combination of plunging demand in the wake of the coronavirus outbreak and a huge glut in oil, the latter as a result of major oil-producing nations being unable to agree a deal on how to cut supply.

RAC fuel spokesman Simon Williams said: "We continue to be concerned about smaller forecourts that provide a vital service in areas where the supermarkets don’t have a foothold as many are already finding conditions tough with sales having fallen off a cliff since lockdown. It would be bad news all round if these forecourts shut up shop for good."

Comments

Wazza78 on 27 April 2020

The global oil market has crashed in recent days, but you're unlikely to see that translate into cheaper fuel in the UK at the pumps. Here's why.

Is it just me or has the article completely and utterly failed to explain the WHY??
There's an implication as to the why for small independent forecourts buts that's hardly the full story is it.

What a completely (& quite literally) pointless article.

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Cornish Jimbob on 27 April 2020

The global oil market has crashed in recent days, but you're unlikely to see that translate into cheaper fuel in the UK at the pumps. Here's why. Is it just me or has the article completely and utterly failed to explain the WHY?? There's an implication as to the why for small independent forecourts buts that's hardly the full story is it. What a completely (& quite literally) pointless article.

The answer to 'why' is because they can charge what they want - it's free market capitalism. That's 'why'.

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Wazza78 on 5 May 2020

The global oil market has crashed in recent days, but you're unlikely to see that translate into cheaper fuel in the UK at the pumps. Here's why. Is it just me or has the article completely and utterly failed to explain the WHY?? There's an implication as to the why for small independent forecourts buts that's hardly the full story is it. What a completely (& quite literally) pointless article.

The answer to 'why' is because they can charge what they want - it's free market capitalism. That's 'why'.

How insightful. Thanks.

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