Petrol prices predicted to fall below £1 per litre
Motoring organisation the RAC is predicting that petrol prices will fall below £1 a litre in the new year.
If fuel prices fall below the £1 barrier in January it will be the first time in nearly six years they have been that low.
In recent months the price of crude oil has plummeted, leading to a gradual fall in prices at the pumps.
Currently, the average price for unleaded at supermarket pumps is £1.14 per litre, with diesel at £1.20 per litre.
RAC fuel spokesman Simon Williams said: “What’s currently happening at the pumps with falling fuel prices is something many motorists will not remember seeing before. Talk of prices going up like a rocket and falling like a feather could not be further from the truth as retailers have been quick to pass on savings at the forecourt since the RAC forecast on December 6 that prices were due to come down by seven pence a litre for petrol and six pence for diesel.”
He added: “The cost of going to visit family and friends this Christmas will be the cheapest it’s been for nearly five years, but the prospect of petrol going below £1 a litre in the new year is incredible, particularly when prices at the beginning of 2014 seemed to be heading ever upwards.
“Current forecasts are for average petrol prices to fall to below £1.10 a litre in the next fortnight and diesel to drop to under 116p. At these average prices across the country the cheapest retailers will almost certainly be selling petrol for around 105p a litre, or even lower.
“It is, however, important to realise that the oil and fuel market can always change due to a number factors, including the strength of the pound against the dollar and the global production of oil. If the current oversupply situation remains then it will clearly be good news for motorists and businesses that rely on the road network. With the United Arab Emirates energy minister saying OPEC will not cut production even if oil falls as low as $40 a barrel, we have every reason to think petrol at under £1 early in 2015 is a very real prospect.
“It’s also important to remember that while the cost of fuel itself has fallen, it currently only represents around a third of the overall pump price with the lion share being made up of fuel duty and VAT. At £1 a litre duty would be 57.95p and VAT 16.67p, leaving the cost of the oil and retailers’ margin at 25.38p – meaning tax would be three quarters of the forecourt price.”
Motorists can keep abreast of fuel prices by visiting: www.rac.co.uk/advice/fuel-prices-explained.