Following up on fuel costs – is a price rise on the way?
About six months ago, we reported on falling fuel prices and how we’d soon end up paying less than £1 a litre at the pumps. As we reached the New Year, prices according to the RAC Foundation tumbled closer to the £1 mark but hadn’t quite dipped below it.
Even today, the latest figures from the RAC Foundation (as of Monday 8th February) suggest that the nationwide average sits around 101 pence per litre (ppl) for both petrol and diesel. On the supermarket forecourts, though, it’s been a very different story.
The supermarket price war
In order to pull in the punters, the likes of Asda, Morrisons, Sainsbury’s and Tesco have been slashing their fuel prices to keep them under £1 per litre and fend off the competition. Even if those slashes have been fractions of pennies.
During January, Asda dropped its Unleaded and diesel prices to 99.7ppl each, before cutting the cost of diesel by another 2ppl. Shortly afterwards, Tesco followed suit to match Asda’s price of 97.7ppl – diesel’s lowest price in six years.
Diesel and petrol price drops have been leapfrogging over the last few months, overtaking each other on a regular basis. Now, however, diesel is set to stay cheaper than petrol, with some analysts even predicting extended price drops in the near future.
Still falling or soon to rise?
The global prices of oil are continuing to tumble, leading forecasts to predict that we can expect the see fuel prices hovering below £1 per litre over the coming months, perhaps even years. However, with the government’s annual budget review due next month, fuel could well be an easy target for an increase in duty.
In order to eliminate the deficit (and keep his pledge at the last election), Chancellor George Osborne needs to claw back another £3billion in tax rises. So even though the base cost of fuel may stay put, the post-VAT cost to the consumer could see drivers paying more at the pumps again.
Of course, we’re simply speculating at the moment so we can’t say for sure what may happen. One thing we do know, however, is that fuel costs are – by and large – at the lowest levels we’ve seen since 2009. Thankfully, prices of the last few years seem like a distant memory, and we can hope that they don’t come back!