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Petrol prices could drop to 112p-per-litre as the global cost of oil tumbles

Published 16 March 2020

Drivers could see the price of petrol and diesel fall by more than a £5 a tank because of an oil price war and the impact of coronavirus.

Motoring group the RAC is expecting big cuts on the forecourt as fuel returns to its lowest price in almost five years. Last week, the price of oil fell from $50 to $30, thanks largely to the breakout of a Russia-Saudi oil price war.

‘If retailers reduce pump prices to accurately reflect what they have been paying for petrol and diesel on the wholesale market for the last week, around 10p-per-litre should come off the price of each fuel,’ said an RAC spokesman.

This would mean average unleaded prices drop to around 112p and diesel to 115p-per-litre - prices last seen in late-2016.

It currently costs an average of £67 to fill a 55-litre car with unleaded petrol, and £68.50 with diesel. If prices fall by as much as the RAC predicts, this would save drivers around £5.40 per tank of petrol and £5.30 per tank of diesel.

Fuel stations at supermarkets have raced to pass on the savings to drivers – but this is driven more by fierce competition for the grocery trade. Asda was the first of the major supermarkets to slash prices for unleaded and diesel, but Tesco, Sainsburys and Morrisons expected to follow suit this week.

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While there are no official figures available, anecdotal evidence suggests demand for fuel is falling as more and more people reduce travel and work from home. Estimates put fuel sales down by as much as 15 per cent over the past week.

Brian Madderson, chairman of the Petrol Retailers Association, says his contacts in Italy – which is in a more advanced stage of the COVID 19 outbreak – have reported a drop in fuel volumes by as much as 60 per cent.

Madderson said, ‘We expect demand to continue to fall, but prices won’t follow suit as retailers strive to protect their margins and make their business model as sustainable as possible.

‘However, we do expect supermarkets to reduce prices as part of their own internal price war to win grocery trade.’

And while consumers have been panic buying toilet roll and hand sanitizer, there’s been no such run on drivers rushing to fill up their car.

Madderson added, ‘Problems could arise if our members have to send staff home, either because they are vulnerable or are showing signs of infection, which could lead some filling stations to close

‘However, this might not cause the problems you would normally expect in a crisis as demand for fuel will be lower.’

Unlike many things, fuel has no shelf life. If demand continues to fall retailers will move into the contagion phase. This is where production outstrips demand and traders hire containers to store fuel in until demand returns.

Comments

   on 16 March 2020

already 114.7 at Asda...

Robert McAuley    on 16 March 2020

In our area, one brand is and has been selling petrol at 109p!

   on 16 March 2020

Exeter as usual has seen a slight reduction BP in the City has reduced its price for diesel to 124.9 nothing to write home about

dadbif    on 16 March 2020

Should be a lot lower, when oil hit $130 a barrel diesel was £1.30 a litre, why hasn’t it dropped now that it is less than $50 a barrell? Profiteering, that’s why..

smartie    on 17 March 2020

Local diesel is still 128.90p/l (south Dorset) and local fuel retailers always put their prices up when it comes to holiday times - Easter, school holidays etc. I`ve just received an advice from my bottled gas supplier (Calor) that their prices are INCREASING from 1st April by £4 on a cylinder !! despite LPG being linked to oil prices. I suppose they`re cashing in because there`s more of us at home and going to be at home and using more of their beloved gas.

Peter Smith    on 17 March 2020

Oil companies are still raking it in with the price of oil down 30% yet pump prices have dropped a fraction of this yet as soon as this is over and a barrel of oil goes up a dollar we will see pump prices skyrocket again

aethelwulf    on 17 March 2020

Well, as an over 70 I will be using little fuel for three months or so. I hope the fuel companies suffer a large fall in use and are left with forward buying contracts to fulfill at a high price. People working from home and not entertaining will reduce demand as will aircraft all parked up. Not a good time to hold fuel company shares so do not expect the mug motorist to benefit.

peter corrins    on 17 March 2020

i do hope this is true as its getting beyond a joke in my area north ayrshire, as tesco and sainsbury's in the irvine part of ayrshire has always been 3 pence dearer than the other parts of ayrshire for the last 8 years and it wont be the first time that i have had to go into other parts to get a better deal with petrol as 3 pence can make a big difference to the pocket but i have seen these two supermarkets holding back the price drop to the people of irvine just to get their profits into the store and not to the customers . so i do hope your right with this one.

elscint    on 18 March 2020

M6 Stafford services last week were selling Super Diesel at £1.60 per litre, THAT is robbery.

james351419    6 days ago

I paid £1.069 for a premium diesel at Costco in Liverpool

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