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2015: The year of falling fuel prices?

By / 9 years ago / Features / No Comments

 

Whisper it quietly, but 2015 could see a year of falling fuel costs due to a drop in the price of global oil.

According to analysts at investment bank Goldman Sachs, US benchmark West Texas Intermediate (WTI) crude will fall to $75 a barrel and Brent to $85 a barrel in the first quarter of 2015, both down $15 from their previous forecast.

WTI could fall as low as $70 in the second quarter and Brent as low as $80, when oversupply would be the most pronounced, before returning to first-quarter levels, Goldman said.

The key drivers for the fall are increased output from non-OPEC countries, such as Brazil and Mexico, a slowing Chinese economy and the huge investment in shale gas production in the USA which has softened demand for oil. However, analysts have warned that the drop in prices could be a ploy by the OPEC cartel to push profit margins on shale gas so low as to make it unviable.

Irrespective of long-term corporate strategies, it could spell lower fuel prices in the early part next year for fleets. The supermarkets are already reacting to the falls, with Asda announcing it was reducing the price of petrol and diesel by 2p a litre. It said the price of its petrol would fall to 120.7p a litre and that diesel would be cut to 124.7p a litre – its lowest prices since December 2010. Morrisons followed by saying it would be cutting petrol and diesel by up to 2p a litre.

But fleets should not plan for a long term drop in fuel costs just yet. According to The AA spokesman Luke Bosdet, it is unlikely prices will fall significantly over most of 2015, with the oil companies still keeping wholesale cost of fuel opaque and the likelihood that any global economic recovery would push prices up again. 

RAC calls for urgent action on motorway fuel prices

The RAC is calling for action on motorway service fuel prices after it found it can cost up to 10p per litre more than the national average.

RAC fuel spokesman Simon Williams said: ‘It’s no wonder that motorists feel held to ransom with prices on the motorways inflated to such an extent. In some cases motorway petrol and diesel might even be 15p dearer than the cheapest forecourts which would add as much as £8 to the price of a tank of an average-sized vehicle.

‘We can see no reason why motorway fuel should be so much more expensive. In fact, arguably it is much easier from a delivery point of view than it is getting fuel to urban filling stations. Questions need to be asked to find out what reasons motorway service operators have for charging such increased prices.’

In May 2013, as part of a review into motorway fuel prices, Prime Minister David Cameron said motorway services could be forced to advertise their fuel prices in advance, but to date there has been no progress in making these changes, nor has there been an update on tackling high motorway fuel prices.

Williams added: ‘We hope that the Government takes action – preferably within this parliament – to make the much-needed change to motorway signage as well as addressing the bigger issue of pricing to make it more affordable for millions of motorists to fill up at motorway services.’

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