Fuel demand and prices drop

What caused these fuel price plunges?

A plummeting of crude oil prices, measured by the barrel, triggered the plunge in fuel price. Oil, which is one of the main substances used to produce petrol and diesel, was worth around $50 a barrel at the start of March. By the end of that month, the value fell to just under $18, the lowest levels seen in 18 years. The lull in oil price was blamed on both the spread of coronavirus cases worldwide, which necessitated far-reaching travel restrictions, in addition to an abundance of supplies arising after a deal dispute between oil-producing countries. It took a little while for the pump prices to drop, but when supermarket retailers slashed costs on the 23rd March, the figures finally began to tumble.

How have these reductions filtered through to pump prices?

If you were to fill up an average family vehicle with petrol (with a 55-litre fuel tank capacity), you’d save £5.05 each time. A similar-sized diesel model would see you spend £4.35 less.

However, the RAC said that fuel retailers could drop the prices even further, considering the wholesale cost of fuel. That could result in an unleaded petrol price of 98p a litre, and diesel’s litre price sitting around 109 pence! 

A need to support independent and rural fuel stations

While RAC fuel spokesperson, Simon Williams, acknowledged the huge savings to be had, he also pointed out that rural and independent fuel retailers were experiencing huge trials. These smaller companies may not be able to compete on price, but they do serve an important role in regions where there are no supermarket fuel stations.

Mr Williams commented, “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.”

Williams also sounded a caution, that prices could potentially begin to rise soon. 

“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”, Williams explained.

If you want to take advantage of the fuel price savings, you might want to brim your tank sooner, rather than later. Don’t forget to follow your car manufacturer's recommendation for minimum octane ratings.

Header image credit: https://unsplash.com/photos/white-car-parked-in-front-of-store--ebVTh022nM