Motorists across the country are being urged to hold off filling up their vehicles until April, as petrol and diesel prices are expected to fall significantly in the coming weeks. Following five consecutive months of price increases, petrol is currently averaging about 139p per litre, with diesel at approximately 146p. However, recent adjustments in the crude oil market suggest that relief may be on the way for consumers.
According to Simon Williams, head of policy for the RAC, wholesale prices have dropped considerably, and this is likely to be reflected at the pumps shortly. "Drivers have had to endure five months of rising prices, so it’s good news wholesale prices have fallen significantly, and forecourt totem signs should soon be reflecting this," Williams stated. He further anticipates that retailers will begin to reduce prices as they replenish their stock with cheaper supplies.
Currently, if the price of a barrel of crude oil remains steady around $70 (£54), petrol could trend back down to around 130p per litre, while diesel might drop to approximately 140p. The recent shift in oil prices—from over $80 per barrel in January to just under $70—is pivotal in this transition. The average price of oil has hovered around $69 per barrel for the past week, marking the lowest sustained rate since August 2021.
In regions with fierce competition among retailers, like Northern Ireland, prices are already notably lower, with petrol averaging 133p per litre and diesel at 139p, which stand 6p and 7p cheaper than the overall UK averages, respectively. This competitive landscape helps drive prices down sooner for consumers.
Asda, one of the major retailers, has recently made headlines by cutting its fuel prices by 4p per litre, a move that Williams praises as a positive step towards reducing costs for all motorists. "It’s great to see Asda leading the way once again with a serious price cut on its forecourts, following our call for retailers to pass on savings from lower wholesale costs. This should spark other retailers into action and help bring down costs for drivers across the country," he commented.
Despite the positive trends, Williams warns that much of the anticipated savings depend on how retailers handle their pricing strategies moving forward. "As always in a falling market, much will depend on how fully retailers decide to pass on these wholesale savings at the pumps," Williams cautions. "The old ‘rocket and feather’ analogy—where prices shoot up like a rocket and plummet like a feather—should hopefully not apply this time."
In 2022, the UK government instructed the Competition and Markets Authority (CMA) to keep an eye on fuel retailing competition. The CMA's investigations have revealed concerning trends, with their first report indicating that consumers were overcharged by £900 million, a figure that grew to £1.6 billion by 2023. Their upcoming quarterly report is eagerly awaited, as questions continue to arise about the levels of competition within the sector.
The price of fuel is influenced by various factors beyond just the crude oil costs. These include the strength of the pound against the dollar, retailer margins, distribution costs, fuel duty, and VAT rates. While taxes remain relatively stable, components like oil prices and currency exchange rates frequently fluctuate, resulting in varied prices at UK petrol stations. As such, savvy consumers are encouraged to monitor fuel prices actively, potentially using tools like the myRAC app, which can help drivers find the lowest prices in their area.
Looking ahead, consumers are encouraged to be patient. Although the average prices remain high now, the potential for decreases offers a glimmer of hope for many drivers who have been grappling with increasing costs over recent months. Keeping an eye on the changing market can prove beneficial, particularly as the increases in prices over the last few months have left many feeling the strain at the pump.
As motorists await further price cuts, the industry continues to watch the fluctuations in crude oil prices closely, as well as the actions of fuel retailers. It remains to be seen how promptly these reductions will be passed onto consumers, but for now, holding off on filling up seems to be the prudent course of action for many.
