Petrol prices ‘could fall below £1 a litre’, says RAC
- Credit: PA
The plunging price of world oil could soon see the cost of a litre of petrol dipping below £1, the RAC has said.
This would take prices at the pumps falling to their lowest level since the end of May 2009, the motoring organisation added.
It said that the price of Brent crude, now down below the 60-dollars-a-barrel mark for the first time since early July 2009, was predicted to keep on dropping.
The RAC added that it was hopeful that petrol would be sold nationally for under £1 a litre in the first few months of the new year.
RAC fuel spokesman Simon Williams said: “What’s currently happening at the pumps with falling fuel prices is something many motorists will not remember seeing before.
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“Talk of prices going up like a rocket and falling like a feather could not be further from the truth as retailers have been quick to pass on savings at the forecourt since we forecast on December 6 that prices were due to come down by 7p a litre for petrol and 6p for diesel.”
The RAC’s monitoring of fuel prices shows the average price of a litre of petrol is 116.9p - nearly 14p a litre cheaper than at the start of the year.
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Diesel is nearly 16p cheaper - 122.33p a litre now compared to 138.24p in January. The average supermarket price of fuel is 114.26p a litre for petrol and 120.18p for diesel.
Mr Williams added: “The cost of going to visit family and friends this Christmas will be the cheapest it’s been for nearly five years, but the prospect of petrol going below £1 a litre in the new year is incredible, particularly when prices at the beginning of 2014 seemed to be heading ever upwards.
“Current forecasts are for average petrol prices to fall to below 110p a litre in the next fortnight and diesel to drop to under 116p.
“At these average prices across the country the cheapest retailers will almost certainly be selling petrol for around 105p a litre, or even lower.”
The price of Brent crude, a key energy industry benchmark, has now fallen by about 50% since the summer amid concerns about weakening demand and oversupply.
It has seen billions of pounds wiped from the value of shares on the London stock market but had also contributed to UK inflation hitting a 12-year low of 1%.
Bank of England governor Mark Carney said yesterday that the fall in the oil price was a “net positive development” for the UK.
Presenting the Bank’s financial stability report, he said: “We should be clear that the 40%-plus drop will flow quickly through to consumers and increase real disposable income and is a net positive for the UK economy.”
Mr Carney warned that the fall in the oil price also presented some risks to financial stability.
He said: “Geopolitical risks could intensify. Inflation expectations could be further depressed in economies, such as the euro area, where core inflation is already weak, slowing nominal income growth and increasing the burdens of debts.”