MORE GOOD CHEER FROM THE FUEL FRONT –
- The cost of a litre of unleaded petrol has dropped 19p since September
- Major supermarkets are planning to reduce the price of petrol by 2 pence
- The price drops have been in response to falls on the global oil market
New petrol price cuts have been announced by the supermarkets from today bringing hope it will dive to a five year low of just £1 a litre.
The move brings the number of reductions since the end of September to 13 with the result unleaded petrol is down by 19p a litre and diesel by 15p.
These falls equate to a fuel cost saving of more than £20 a month for unleaded cars and around £13 for diesel, which will be welcomed by families emerging from a six year cost of living squeeze.
Petrol prices will soon hit a five-year low as the cost of a barrel of oil continues to collapse
And as oil prices continued to fall this week, there is every chance of further reductions towards the magic low of just £1 a litre for the first time since May 2009.
Asda triggered the latest round of reductions with a national price cut of 2p a litre on petrol, taking it down to a maximum of 107.7p, while diesel was cut by the same figure to 114.7p a litre.
Morrisons and Tesco followed suit by announcing their own 2p cut, however, unlike Asda, the two retailers vary their prices based on location and local competition. Sainsburys also confirmed a 2p a litre cut on petrol and diesel across its 298 forecourts.
The fall follows a collapse in the global price of oil during 2014, amid a slowdown in key economies, particularly China, and a glut caused by a rise in production in the US and the Middle East.
Oil dropped towards $56 a barrel yesterday, which means it has seen the biggest annual decline since 2008.
The price of Brent crude oil, which is seen as a global benchmark, has fallen 49per cent in 2014 and there are suggestions it could dip below $50 in the new year.
Driver and consumer groups have been critical of the oil companies and retailers for being slow to pass on the lower price of crude oil. However, the RAC is now confident that the price of unleaded will fall to £1 a litre.
Its head of external affairs Pete Williams said: These further cuts will certainly bring extra cheer for motorists for the new year.
With record lows in the price of a barrel of crude oil, it is encouraging to see retailers passing on those savings to their customers.
These latest cuts are also another step towards the very real prospect of a £1-per-litre average price in January, as predicted by the RAC in December, which really would guarantee a happy new year for millions of motorists in 2015.
Supermarkets such as Asda have announced that they are reducing the cost of fuel by a further 2p a litre
The AA was more sceptical about reaching £1 a litre, but it said: The UK average price for petrol is currently around 113p per litre and these welcome decisions on making further price cuts will eventually filter down in some form to other retailers.
So the UK average price will fall further as we enter 2015. However, just how far it falls is anyones bet. Current indications are that the magical £1-per-litre average price across the UK is still looking unlikely in the short term.
The average driver of a petrol car uses 107 litres of unleaded a month. Consequently a reduction of 19p a litre, equates to a saving of £20.33 a month or £243.96 a year.
The price of diesel has come down by 15p a month since September. With annual monthly usage of 85 litres, this equates to saving of £12.75 or £153 a year.
Falling fuel prices are a boon for the wider economy and are predicted to boost growth in Britain and across the world.
Transport costs will be lower, which will fuel predictions that prices across all goods and services will show annual falls by the Spring a phenomenon known as deflation.
Recent studies have already shown that food prices, clothes and electricals are already cheaper than they were a year ago, but this could spread to include other sectors.
The Centre for Economics and Business Research said: Cheap food, cheap petrol and falling energy bills should revitalise the world consumer and by year end the world economy could be close to booming.
It added: Inflation could even be negative on the Consumer Prices Index measure in the Spring and Summer for the first time ever and on the RPI measure for the first time since April 1960. The last full year of negative inflation in the UK was 1933 when inflation was -2.2per cent.
Asda has cut prices 13 times at all its 245 filling stations since the end of September, generally forcing its mainstream rivals to follow suit.
Its petrol trading director, Andy Peake, said: Were pleased to be giving drivers some early New Year savings with Asda once aga
in leading the way with our thirteenth price cut on fuel since September.
No matter where customers live, they will benefit from the same fuel price with our national price cap of 107.7ppl for unleaded and 114.7ppl for diesel.
Tesco, which varies prices across its 500 stations, said its latest cuts come on top of a saving worth 6p a litre that holders of its ClubCard can claim under its FuelSave scheme. The chain said people using this scheme pay less than any other drivers.
Mark Todd, the petrol director for Morrisons, which has 332 filling stations, said: Recent wholesale price drops have allowed us to pass savings on to the customer.