- Fuel retailers expected to pass on wholesale savings
- RAC calls for petrol prices to reduce to 114p
- The price of crude oil has been falling since June
The RAC is urging fuel retailers to pass on further savings to customers as world oil prices continue to fall.
According to the motoring organisation's monitoring of fuel prices, there is scope for the price of a litre of petrol to come down by more than 7p and diesel to drop by nearly 6p, bringing the average price of a litre of petrol to 114p and diesel to 120p – prices last seen across the country in March 2010. Currently, the average price of petrol stands at 120.84p, with diesel at 125.43p whereas at the start of the year petrol was 130.79p a litre and diesel was 138.24p.
According to the RAC, motorists would be saving over £9 (£71.93 down to £62.70) when filling up an average 55-litre family car compared to the beginning of the year if the prices were reduced to 114p. You'd save closer to £10 for a diesel at 120p a litre, as £76.03 would shrink down to £66.
In June a barrel of crude reached a 2014 high of $115.36 – and the highest price since September last year – but since then it has fallen dramatically. As of Thursday December 4 it stood at $68.59. And, while the falling oil price has been reflected at the pumps by retailers consistently reducing forecourt prices, the latest savings in wholesale prices need to be passed on quickly to demonstrate transparency.
RAC fuel spokesman Simon Williams said: “The tumbling oil price, coupled with a pound that is still strong against the dollar, have led to a phenomenon that many motorists are pretty unfamiliar with – falling pump prices. The forecast reduction that retailers should be passing on is the biggest the RAC has seen in recent years, even since petrol began to come down from its record high of 142.48p a litre on 17 April 2012 (diesel 147.93p – 13 April 2012).
“Retailers now have a very reasonable record on transparent pricing so we have no reason to believe that they will not pass on the savings in the wholesale price, we just urge them to do it sooner rather than later to make the point very clearly to motorists that they operate a fair pricing system.
“While motorists are enjoying much lower forecourt prices it’s important to recognise that they will always be limited by fuel duty, which represents nearly 58p in every litre, and VAT which is charged on top, at around 20p a litre. A driver filling up a 55-litre petrol car at 114p a litre would therefore pay £62.70 of which £31.87p would be duty, £10.45 VAT and only £20.38 for the fuel itself,” Williams said.