Petrol prices fell by their largest margin in 12 years as the value of oil plummeted amid the coronavirus pandemic. Data from the RAC’s Fuel Watch initiative, which tracks the price of petrol and diesel across the country, showed the average litre of petrol was 9p between the beginning and end of March, while the average litre of diesel fell by around 8p.
As a result, the average litre of petrol cost 113.54p on forecourts at the end of March, down from 122.72p at the beginning of the month. Similarly, the cost of diesel fell from 125.7p to 117.8p per litre over the same timeframe.
That means filling a typical family car’s 55-litre fuel tank with petrol was more than £5 cheaper at the end of March than it was at the beginning. And filling a similarly sized tank with diesel was £4.35 cheaper at the close of the month.
According to the RAC, the price drop represents the steepest reduction in prices for more than a decade, with October 2008 the last month to see such a fall. And the organisation says motorists could see further price reductions in April, if retailers pass on their savings to the customers.
The RAC claims plunging demand in the wake of the coronavirus outbreak and a “huge glut” in oil, thanks to major oil producing nations’ inability to agree a deal on how to cut supply, have caused the oil price to fall off a cliff. A barrel of oil fell below $20 last month - the lowest it has been in 18 years - and although prices have recovered slightly, they’re still well below the $50 mark seen at the start of March.
Based on the reductions in the wholesale price (the amount fuel stations pay for the fuel) of both unleaded and diesel, which down 16p and 10.5p respectively last month, the RAC says there is still scope for prices to drop to 98p per litre for petrol and 108p for diesel.
“February was a pretty extraordinary month for fuel price reductions, but nothing prepared anyone for what would happen in March as the impact of the coronavirus began to be felt,” said RAC fuel spokesman Simon Williams. “An already-oversupplied oil market was suddenly faced with an enormous shortage in demand as worldwide travel ground to a halt.
“Wholesale fuel prices have slid so far that there remains scope for further price cuts, but we are very mindful at this time of the pressure this can place on smaller, independent forecourts that provide a vital service in areas where there is no supermarket footprint. While we all want reasonably priced fuel for our essential journeys, 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.
“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.”