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Good news for motorists as the price of petrol could fall below £1 per litre in the next few weeks. Currently the average petrol price is £1.07 and diesel at £1.10 with some forecourts having already lowered theirs prices to £1.03 per litre.
The last time that petrol prices fell below £1 was the beginning of 2009. Before the financial crisis hit in late 2007 the price of petrol or diesel in the UK was consistently below the £1 mark.
Morrison's is due to cut the price to £1 per litre for unleaded petrol to customers who spend at least £40 instore. This is due to spark a price war with other supermarkets as they compete to undercut each other in the run up to Christmas.
“The heat has really been taken out of the cost of motoring this summer, with the big four supermarkets now selling unleaded and diesel for considerably less than in recent months”, Rod Dennis, an RAC spokesperson.
However not all expect the price to stay that low and prices may be rise before we have had the chance to really experience the savings. The sudden price drop may just be a ploy to get customers through supermarket doors in the holiday period. Luke Bosdat from the AA stated that the price drop may just be “some kind of marketing gimmick” and the price drop may not be expected to last.
It is worth noting that the retailers and other petrol stations have only a very limited influence on the price of fuel sold to customers. For example these graphics below from petrolprices.com show the breakdown of price per litre for petrol and diesel (on 12th August 2011).
The current price of oil per barrel is roughly $40 per barrel. The price of petrol is at its lowest in 5 years as members of the Organisation of Petroleum Exporting Countries (OPEC) are currently in intense competition with each other. Saudi Arabia reduced it's pricing for buyers in North West Europe and has also replaced Russia as the number one exporter of oil to China, as well as it's more established markets like Poland. However this may not last as the OPEC members are due to meet early December with the possibility of setting an equilibrium price of $88 a barrel. If the competition between OPEC members went unchecked it is reckoned that by 2016 the oil prices may even go down to the “Mid-20s” according Eulogio del Pino, Venezuala's Oil Minister.
So we can expect the price of filling up our tanks to get even better in the near future, so long as the oil industry remains as competitive as it is now. This is also with the hope that the government doesn't decide to increase tax too. “Let’s just hope the Chancellor doesn’t spoil the party by using lower prices as an excuse to raise fuel duty in his Autumn Statement next week. The Treasury’s own research shows that lower fuel prices can boost economic GDP and at a time where some think tanks are predicting the economy will slow, surely the best way to keep the country moving and keep the economy going is to freeze fuel duty.” Simon Williams, RAC fuel spokesman.
What do you think about the falling petrol prices? Do you think it will last?
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