Petrol and diesel could soon be cheaper than bottled water if the price of a barrel of oil continues to freefall, says the RAC.
With oil prices plummeting towards the $20 mark, supermarket pump prices for petrol and diesel should soon be around the 90p a litre mark, but with some analysts predicting a further fall to $10 a barrel the forecourt price could drop even further.
Oil prices have fallen by 30% since the beginning of December, to a 12-year low of $30.06 a barrel by the start of this week, however wholesale prices have been propped up by the weakness of the pound against the dollar.
“With no apparent end in sight to the freefalling price of oil, motorists can expect some really low fuel prices in 2016”, said RAC fuel spokesman Simon Williams.
“Breaking through the pound a litre price point for both petrol and diesel was clearly a welcome landmark, but it looks as though there is more to come. “In fact we may get to a bizarre time when a litre of fuel is cheaper than a litre of some bottled waters.
However, the RAC warned that fuel prices can still be something of a postcode lottery, with some disparity in prices around the UK. With average forecourt petrol prices of 102.5p per litre, and diesel at 103.21p, the sub-£1 a litre fuel prices in many areas have been driven by the major supermarket retailers, but RAC Fuel Watch data – which monitors the same information as retailers – suggests scope for a further fall in prices.
Simon Williams said, “At the moment, however, we have a situation where retailers still need to pass on more wholesale price savings on diesel to motorists at the pump, as the wholesale price is still 3p a litre cheaper than that of petrol. We should really be seeing diesel priced several pence cheaper than petrol on every forecourt, to the point where the average price of diesel goes below that of petrol. In many areas of the UK the price of fuel is sadly far higher than it should be: we would urge every fuel retailer to price fuel on their forecourts so that it more fairly reflects wholesale prices. They have been using the savings in the wholesale cost of diesel to subsidise petrol prices, but for the sake of transparent fuel retailing, this needs to change and motorists should see another cut in the price of diesel. If retailers were to reduce the diesel price in line with the wholesale cost we should see the average price get very close to the £1 mark. We are concerned that too few drivers are benefitting from these incredibly low oil prices as many less competitive retailers are still selling fuel at far nearer to £1.10 a litre than £1.”
Motorists can keep abreast of the latest fuel prices by chicking out #racfuelwatch on Twitter.
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