Britain’s four largest retaliers have announced that the cost of unleaded petrol will decrease by 2p per litre as world oil prices continue to fall
Fuel prices have been tipped to drop below £1 per litre for the first time in over five years as falling oil prices have forced supermarkets to slash the cost of unleaded petrol by 2p per litre.
ASDA, Tesco (Xetra: 852647 – news) and Morrisons have already reduced charges across their fuel stations, and Sainsbury’s is set to follow suit on Sunday.
“The heat has really been taken out of the cost of motoring this summer, with the big four supermarkets now selling unleaded and diesel for considerably less than in recent months”, said Rod Dennis, an RAC (Taiwan OTC: 2237.TWO – news) spokesperson.
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“Drivers should be noticing cheaper fuel across the UK, with some independent retailers also proving to be fiercely competitive when it comes to price.”
ASDA has promised drivers a ‘weekend boost’ that will see them paying no more than 109.7p per litre across all of its 272 service stations.
This means that the retailer has cut unleaded prices by 5p per litre in the past month, and lowered diesel prices by 9p.
“The reason we’ve been slower to see unleaded price cuts is because the wholesale price of petrol – the price retailers buy the fuel for – has not fallen at the same rate diesel has”, said Mr Dennis.
Diesel prices have steadily been decreasing since May, pushed down by increased capacity from Asia.
Earlier this month, its price fell below the price of petrol for the first time in fourteen years.
Morrison’s meanwhile has confirmed that its latest reductions means that unleaded fuel is 15p a litre cheaper than during last year’s August bank holiday, making it £7.50 less expensive to fill up a family car.
Cheaper prices in the UK are part of a wider fall in global oil prices, which have plummeted by more than 50 percent from their highs a year ago.
The drop is driven by an unprecedented global surplus in oil, caused by a massive increase in US supply on the back of the shale revolution combined with the decision by other major oil producers such as Saudi Arabia and the rest of OPEC to maintain their production levels, rather than sacrifice their own market share to restore prices.
It (Other OTC: ITGL – news) is exacerbated by increased efficiency in energy use and the increasing prevalence of alternative energy sources natural gas.
“The current weakness in world markets is working in the favour of motorists because plummeting oil prices are combining with a strong pound to help us reduce petrol prices”, said Jamie Winter, Morrison’s service director.
The International Energy Agency has predicted that the prices have further to fall, with the new low rates lasting well into 2016.
Mr Dennis has accordingly predicted more cuts to consumer prices.
“If the conditions stay right, we could see some even lower prices in a few weeks as people return to work after the summer and the school run begins again. And if Brent Crude were to move to the 40 US dollar per barrel mark, the prospect of some enterprising retailers selling fuel for £1 per litre will make a return.”
Steve Gooding, director of the RAC Foundation, echoed his forecast.
“The current retail margin on petrol is almost twice as much as the long-term average which is another indicator that pump prices could fall further”, he stated.
“However it is worth remembering that the biggest influence on what motorists pay at the forecourts is not the oil price but taxation.”
