Pump prices plummet as oil demand collapses
UK petrol prices fell by their largest margin in 12 years in March, triggered by a complete collapse in the world oil price.
Data from the RAC shows that over-supply of oil and the impact of coronavirus on demand sent prices plummeting. While the price of a barrel of crude oil began the month above $50, by the end of March it had plummeted by 66% to under $18; its lowest level in 18 years.
This has led to historic cuts in wholesale and, subsequently, retail forecourt prices. The average price of unleaded fell more than 9p in March, from 122.72p to 113.54p per litre, while the price of diesel was down by nearly 8p, from 125.7p to 117.8p per litre; the largest single month price reductions since October 2008.
Unprecedented single price cuts by the supermarkets on 23 March contributed to the overall monthly price drops. Morrisons was the first supermarket to announce a 12p per litre cut in petrol and an 8p per litre cut in diesel prices, with prices at the supermarket down to around 104p for petrol and just under 111p for diesel by the end of the month. Asda however retained its position as the supermarket selling the cheapest fuel, with petrol down 14p in the month to just 102.7p by the end, with diesel down to 108.7p.
But the RAC said the possibility of further price cuts in April remains. Based on the reductions in the wholesale price of both unleaded and diesel – down 16p and 10.5p respectively last month – there is still scope for forecourts to come down even further, to 98p per litre for petrol and 108p, if retailers pass on the savings they are making to drivers.
However, RAC fuel spokesman Simon Williams warned of the impact on smaller, independent forecourts as he spotlighted how they provide a vital service in areas where there is no supermarket footprint.
“While we all want reasonably priced fuel for our essential journeys, surely none of us want to see smaller enterprises going out of business trying to match the supermarkets’ big price cuts at a time when so few of us are driving compared to normal,” he continued.
Williams added: “While the impact of the coronavirus on travel and oil demand continues, there are early signs that the oil price won’t stay as low as it has been in recent days for very much longer. The price war that has been raging between two big oil producing nations, Saudi Arabia and Russia, may be reaching its end if recent statements from the United States are correct – but it is very early days and something we will keep a close eye on.”