2 December 2015

Fleets to save cash as fuel prices drop close to six-year low

Average petrol pump prices have moved to within 2p of the six-year low recorded earlier this year, and may fall even below that before Christmas, according to the latest AA Fuel Price Report.

What’s more, diesel, which would normally become more expensive at this time of year, has dropped to its lowest price since the end of 2009. Fleets can therefore expect to make fuel budget savings as recent cuts in the wholesale price of petrol, which amount to around 2p a litre, feed through to the pumps.

The AA said the current average price of a litre of petrol was 108.01p with the current average for a litre of diesel at 110.24p.

At the pumps, supermarket fuel pricing, as part of the ‘big four’s’ strategy to counter the threat of newer, lower-cost rivals, continued to set them apart from other retailers, said the AA.

The key question, it said, was whether petrol sales, that had persisted this summer at levels previously associated with winter, continued on that track or dropped further putting even greater pressure on non-supermarket fuel retailers.

However, the AA said that the ‘holy grail’ of fuel at £1 a litre still remained very doubtful, unless used only as a marketing gimmick.

AA President Edmund King said: ‘It would be a good start to the run-up to Christmas if petrol prices fell to a new low for the year. However, this year’s lower pump prices have failed to reinvigorate pump sales in the UK.

‘Although the price of oil is back into the low $40s, a surge to $50 a barrel a fortnight ago – based on a five-month-old report from China’s central bank – illustrates the continued volatility in the market. In short, UK drivers should make the most of lower pump prices while they last.’

The RAC said it hoped retailers would be quick to pass on the new wholesale fuel savings at the pumps to make the cost of a litre cheaper still.

A spokesman said: ‘After a summer of lower forecourt prices, motorists are now looking forward to the prospect of yet lower petrol and diesel. While we are a way off average petrol prices reaching £1 a litre, there is a good chance the most price-competitive fuel retailers will take the plunge.’

The spokesman added: ‘Low oil and fuel prices appear to be here to stay as cutting supply to shore up prices is not an option for OPEC – the Organisation of the Petroleum Exporting Countries – as it is dead set on not letting its competitors take any of its share, something which would almost certainly happen with a higher barrel price.

‘With yet more oil due to hit the market as Iran begins to produce again following its nuclear deal with the West, the long-term outlook has to be low oil prices for a further 12 months.’