There has been a lot of speculation recently regarding the price of fuel during the coronavirus pandemic, and research has now shown that fuel has dropped to its lowest level since May 2016.
The average cost of filling up a car with unleaded petrol has dropped to its lowest level since May 2016, as a result of the historic oil price falls caused by the coronavirus outbreak, data from RAC Fuel Watch shows.
It now costs less than £60 to fill a 55-litre hatchback car and there is potential for further price cuts if lockdown restrictions are lifted
The average price of a litre of petrol fell by 4.15p in April, from 113.1p to 108.95p, meaning the cost of filling a 55-litre hatchback car fell from £62.21 to just £59.92.
Those able to refill at the cheapest UK supermarket forecourts meanwhile were able to do so for just £56.49. Drivers of diesel cars can now refill for £63, down from £64.63, thanks to the average price of a litre falling nearly 3p from 117.5p to 114.54p per litre last month.
Ironically, the impact of the coronavirus, despite being one of the main factors in why UK fuel prices have dropped, is also the reason why they are not falling any further.
The cost of oil collapsed to its lowest level in 21 years last month – down to just $13 on 21 April – as a result of demand disappearing in the wake of the coronavirus outbreak. But while this sent wholesale prices plunging still further in the month, some of the UK’s largest fuel retailers did not cut forecourt prices with so few people buying fuel in the first place.
This was in sharp contrast to March which saw the supermarkets announce an unprecedented 12p per litre price chop on a single day.
April can therefore be seen very much as a ‘catch-up’ month for other fuel retailers – while supermarket prices were largely static, other forecourts finally cut their prices which led to the average price paid by drivers across the UK falling.
Subject to any significant easing of the coronavirus lockdown restrictions that have forced millions of drivers to restrict the number of journeys they have taken since 23 March, there remains scope for a further 12p per litre to come off the prices of both petrol and diesel. If fully reflected at the pumps, this would see unleaded down to an average price of 96p per litre and diesel down to 102p. Clearly however, retailers are only going to reduce prices again if they can be confident of selling fuel in large enough quantities.
RAC fuel spokesman Simon Williams said: “The impact of the coronavirus is being felt everywhere – from the steep falls in demand for oil right across the globe, right down to the behaviours of the UK’s millions of drivers who have seen their car use – and their need to fill up – fall away dramatically since the lockdown began.
“While it might seem odd that fuel price falls stalled last month despite wholesale prices coming down yet further, it is explained by the simple fact that UK fuel retailers will have been selling a fraction of what they would normally have sold in the last six weeks.
“We expect that only an easing of lockdown restrictions by the UK Government will trigger forecourts into changing their prices significantly, as this would effectively be a signal to millions that they can start making different types of journeys again by car, not just those currently deemed ‘essential’. As and when they do, drivers could be in line for even cheaper fill-ups in the coming months if wholesale prices remain suppressed, but that remains a big ‘if’ because as soon as more of us start driving the price of oil could begin to increase.
“A cut in oil production, which was previously agreed by some of the world’s largest oil-producing nations, is likely in time to lead to the oil price drifting back up again, although for now supply is outstripping demand so much that it’s hard to see prices increasing by any great margin in May.”
It will be interesting to see how fuel prices begin to change once lockdown restrictions begin to ease and millions of people begin making car journeys again.