Though fuel prices have been on the way down for several months, consumers are still not benefitting from the full reduction in wholesale oil prices, according to the RAC.
The motoring organisation has claimed that petrol prices should drop by more than 7p per litre and diesel by just under 6p per litre if fuel retailers are to pass on the true savings they have experienced in global oil costs.
Were these reductions to come into force, the price of fuel could drop to around 114p per litre for petrol and 120p per litre for diesels – levels not seen since March 2010. Spokesman from the RAC, Simon Williams told the Press Association: “The tumbling oil price, coupled with a pound that is still strong against the dollar, have led to a phenomenon that many motorists are pretty unfamiliar with – falling pump prices.”
The tumbling oil price, coupled with a pound that is still strong against the dollar, have led to a phenomenon that many motorists are pretty unfamiliar with – falling pump prices.
Making falling prices possible is the drastic reduction in the cost of a barrel of oil – down from $115.36 in June to just $68.59 yesterday. Average fuel prices now stand at 120.84p per litre for petrol and 125.43 for diesel, down from 130.79p and 138.24p respectively at the start of the year, according to the RAC.
Williams has urged retailers to pass on savings at the pump more quickly: “Retailers now have a very reasonable record on transparent pricing so we have no reason to believe that they will not pass on the savings in the wholesale price, we just urge them to do it sooner rather than later to make the point very clearly to motorists that they operate a fair pricing system.”
However, the RAC was also quick to point out that any savings passed on to consumers are limited by the significant proportion of fuel costs that are made up of taxes: Those filling up an average 55-litre fuel tank with petrol could expect to pay £62.70 (should prices fall to 114p per litre), with £31.87 of that being fuel duty, £10.45 consisting of VAT and the fuel itself costing just £20.38.