2015 has seen fuel costs fall and rise again, not just in the UK but also further afield. Lower prices of both petrol and diesel at the beginning of the year can be attributed to the lower price of crude oil, with Brent crude oil hitting its lowest level in six years. Major supermarkets and local garages alike cut their prices in response, and it was reported that three West Midlands garages were even selling petrol at under 100 pence a litre, a price not seen for over five years.
Motorists continued to enjoy low prices throughout the early months of 2015, though the prices didn’t drop as dramatically as some industry experts suggested they might. Fair Fuel UK highlighted that the huge drop in crude oil wasn’t completely reflected in the lower cost of fuel, and as has been observed many a time, the prices at the pump are quick to rise when oil prices go up, but they are far slower to respond in reverse. Still, there were some very happy consumers around, as they saw how much further they could travel for the same outlay. Fuel costs have significant effects on motor use; together with an insurance policy and road tax, they are a key cost for motorists.
Come the May Day Bank Holiday weekend it was a different story. Fuel costs gradually rose throughout the year, and by the beginning of May the average price of petrol was around 115 pence a litre, up from approximately 103 pence a litre back in January. These price rises cannot be attributed to increased fuel duty tax on petrol and diesel, which as of the beginning of May remains frozen. Rather, the rising costs are down to increases in the price of crude oil itself over the course of the year, now standing at $66 a barrel.
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As we look forward to summer, it looks as though this trend is set to continue. Unfortunately, it doesn’t look as though we are likely to see the price of crude oil hit its floor price, estimated at $40 a barrel, which was thought possible earlier in the year. This would have equated to 100 pence a litre at the pump, but with tax at 75 per cent it could not have fallen much further without garages making a loss. Factors that have to be taken into account here include manufacturing cost, handling and retailer profit, as well as currency fluctuations, as crude oil is priced in US dollars – a weaker pound should mean cheaper petrol prices.
Fuel costs have far-reaching effects, and those in the motor trade will be keeping a close eye on prices, whether they are dealers of new and used cars, companies transporting vehicles under trade plates, or associated trades. But, for now at least, it looks as though fuel prices have already fallen as low as they will in 2015. If oil does drop in price later in the year, there could be average petrol prices as low as 100 pence a litre, but experts tend to agree that this is about as low as they can go without a reduction in tax.