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Petrol price drop is 'third biggest in 25 years'

By / 9 years ago / Latest News / No Comments

Since mid-November, the average price of petrol has dropped from 122.93p a litre to 116.32p, a reduction of 6.61p. Over the past month, the average price of diesel has fallen 5.27p, from 127.43p a litre to 122.16p.

According to AA data, the top five monthly petrol price crashes in the last 25 years were:

  1. 11.5p a litre October to November 2008 106.4p down to 94.9p Oil at around $65 Caused by the credit crunch.
  2. 7.9p a litre August to September 2006 98.2p down to 90.3p Oil at around $63 Caused by the end of the Lebanon conflict.
  3. 6.6p a litre November to December 2014 122.9p down to 116.3p Oil at around $60 Caused by OPEC reaction to oil glut.
  4. 6.5p a litre September to October 2008 112.9p down to 106.4p Oil at around $69 Caused by the credit crunch
  5. 6.3p a litre July to August 2008 119.5p down to 113.2p Oil at around $113 Caused by the credit crunch.

 With a car being refuelled typically twice a month, monthly petrol costs for a standard 55-litre fuel tank have dropped £7.26. The cost of diesel for an 80-litre van fuel tank is down £4.22 compared to a month ago.

After a relatively stable petrol wholesale price from mid-October to mid-November, a 2.1p-a-litre fall in the last two weeks of November and a significant 6.2p fall in the last fortnight creates the potential for another 2p to 3p-a-litre fall at the pump. This began with Wednesday’s (17 Dec) announcement by supermarkets of an up to 2p-a-litre price cut this week.

However, when comparing average prices between brands, th AA found that Asda continues to give a clear 1.5p advantage over its competitors for both petrol and diesel. At street level, it means that drivers in Asda towns continue to enjoy cheaper prices while supermarkets in other towns charge up to 3p a litre or £1.50 a tank more for their fuel.

The possibility of the average petrol pump price falling below £1 a litre in the near future remains remote. Fuel duty + VAT alone accounts for almost 70p a litre. A further 5p to 10p for retailer/suppliers margins + VAT, leaves wholesale +VAT needing to be around 20p to 25p.

With wholesale petrol including VAT currently at around 33p a litre, the wholesale price would need to fall at least a quarter for the average petrol pump price to approach the £1 mark – with a further hefty fall in the oil price to help make that happen.

Market experts have told the AA that this would require oil to drop to around $40 a barrel, a third lower than now.

 ‘A potential drop in fuel prices will of course be welcomed by day-to-day motorists, but it will also have a very significant impact on UK plc,’ commented John Leeman, TrustFord’s operations director.

‘Whether it’s driving to meet with clients or to deliver goods, a saving at the fuel pump combined with the promised investment to improve Britain’s road infrastructure will ease the pressure on millions of businesses, small and large, that rely on their cars and vans for work.’

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Katie Beck

Katie joined Fleet World in 2012 as an editorial intern, following the completion of an English and American Literature BA from the University of East Anglia. She accepted a full-time position as an editorial assistant at the end of the internship period, and was promoted to the role of features editor in 2014. She works across the magazine and website portfolio, and administrates the social media channels.