- Morrisons is the first supermarket to cut its diesel prices
- RAC believes 90p per litre could be possible in the future
- An average 55-litre fuel tank fill-up £10 cheaper than a year ago
Supermarkets have cut their diesel prices to below £1 per litre – the cheapest it’s been since 2009.
Morrisons was the first to lower its prices before Asda, Tesco and Sainsbury's quickly followed suit. This follows the price of petrol falling below the £1-per-litre threshold in the weeks before Christmas.
The cut reflects further falls in the price of oil, which is its lowest for 11 years. UK Brent crude oil is currently trading at just below $38 (£26) per barrel, having lost 35 percent over the year.
And the long-term outlook for oil prices is good news for motorists. Saudi Arabia has reiterated its intention not to cut oil production, and with demand also down, this suggests that sustained lower petrol and diesel prices are going to be around for much of 2016. The recent cuts will make filling up an average 55-litre fuel tank £10 cheaper than a year ago.
The RAC has welcomed the cut in pricing but believes it was slow in coming.
RAC Fuel Watch spokesman Pete Williams said: “The wholesale price of diesel has been around two pence cheaper than the wholesale price of petrol since a couple of weeks before Christmas so we should have seen these cuts earlier and that is what the RAC has been calling for.
"We hope that other fuel retailers will follow suit swiftly and do the right thing for motorists. This should reduce the average price of diesel across the UK for motorists everywhere who can then benefit from the low price of crude oil on the world commodity market."
Around 75 percent of the price of UK fuel goes to the Treasury in duty and VAT. The rest is refinery costs, distribution and the fuel retailers' profit margins. This means there’s a limit to how low the price of diesel could fall, however the RAC believes we could see the pump price fall as low as 90p a litre this year.