As the UK heads towards a CoronaVirus comntainment strategy, there is some good news for those drivers who are allowed to travel, assuming stronger restrictions on public gatherings, sporting events, conferences, gigs, holidays etc are put in place next week. The price continues to fall as demand for crude oil slows, following the huge impact on China’s manufacturing economy recently, after the virus outbreak in Wuhan province.
Now down to about £1.14 per litre on Unleaded, and £1.17 for diesel at Asda, with Morrisons following Asda’s lead tomorrow, the pump price may fall yet again in the coming weeks, although tomorrow’s Budget might see an increase in fuel duty of course.
The other factor in all this is the poker game being played betwen Saudi Arabia and Russia regarding crude oil production. Both nations are over-producing given the dip in global demand, so the wholesale – or spot price – is also heading down. As most of the cost per litre in the UK is tax, both fule duty, and then VAT added on top, even a total collapse in prices is unlikely to see pump prices move below £1.05 for any significant length of time.
Reacting to the petrol and diesel price cuts announced today by UK supermarkets, RAC fuel spokesman Simon Williams said:
“After such a sharp drop in the price of oil it’s right that pump prices start falling, and quickly. We hope other retailers large and small follow Asda’s lead by trimming their prices and delivering good value to UK drivers.
“But despite these headline-grabbing price reductions, it remains the case that the wholesale price of both petrol and diesel has fallen so far that we really should be seeing far deeper cuts at the pumps. Even with today’s cuts, we believe there is scope for a further 7p to 8p to come off the price of both fuels over the next fortnight – so we will be keeping a close eye on what the supermarkets do in the coming days.
“The market is awash with oil, with the fall in demand brought about by the coronavirus outbreak and new tensions between Saudi Arabia and Russia. Collaboration between Russia and OPEC, of which Saudi Arabia is a key member, on the quantities of oil produced had helped to prop up the oil price in the last few years, but with the apparent end of their pact it is difficult to see oil prices rising very much in the next few weeks.
“Clearly, with all the current volatility this is no time for the Chancellor to consider a hike in fuel duty at tomorrow’s Budget.”