At the end of last month, the average price of unleaded stood at 124.02p per litre in the UK, representing a decrease of 2.93p compared with the beginning of the month. Meanwhile diesel prices fell to an average of 127.04p per litre — down 4.24p compared with the beginning of February.
That means the average cost of filling a typical family car’s 55-litre fuel tank with petrol fell by £1.61, down to £68.21. Filling a similarly sized fuel tank with diesel cost £69.87 — a £2.33 drop compared with the start of the month.
According to the RAC’s data, supermarkets are still offering some of the cheapest fuel in the country, with average prices roughly 5p per litre lower than those seen in conventional filling stations. Asda is leading the way at the end of February, the organisation says, with average prices of 116.78p a litre for petrol and 118.8p per litre for diesel.
The RAC says the nationwide reduction in fuel prices was driven by a $10 slump in the price of a barrel of oil, which fell from a high of $60.28 on 20 February to $50.41 by the end of the month. Over the course of the whole month, however, the reduction was just $3, as prices started February at $53.48 a barrel.
Because of that, the wholesale price of unleaded — the amount retailers pay for the fuel — dropped to less than 90p per litre before delivery, retailer margin and VAT. The diesel wholesale price, meanwhile, finished February at 92p per litre. Given that the last time wholesale prices were so low, petrol cost 5p less than the current average and diesel cost 8p less than the present average.
The RAC says retailers should keep cutting their pump prices so drivers are charged a fair price which properly reflects the large reductions on the wholesale market. The organisation’s fuel spokesman, Simon Williams, said the reductions were good for drivers, but prices should continue to drop.
“February was a good month for drivers with two rounds of supermarket price cuts, both led by Asda, which put an end to two consecutive monthly rises,” he said. “These resulted in 3p being shaved off the average price of petrol and 4p off diesel.
“While it is good drivers are benefitting from lower forecourt prices, in reality the wholesale price is such that the big four supermarkets, which dominate UK fuel retailing, should cut their prices again. At the moment both fuels are 6p a litre too expensive, which means for petrol we should really be seeing a UK average of 118p. Unfortunately, we don’t think diesel will come down to the 2017 price of 119p a litre due to wholesale prices only dropping to 92p a litre briefly as a result of oil suffering its biggest weekly decline in more than four years.
“The oil price has slumped due to the spread of the coronavirus prompting fears of slower global demand. This may well lead to a move from oil producer group OPEC and its allies to restrict production when they stage an extraordinary meeting in Vienna on Friday. If they decide to take action to prop up the barrel price it would very likely put an end to falling forecourt fuel prices.”