UK Petrol prices continue to fall, with reports of some petrol stations already offering petrol at less than £1 a litre.
The coronavirus crisis has had an impact on pump activity because of the global restrictions on air and road travel, but petrol prices are also falling due to the wholesale oil market.
In January 2020, the price of a barrel of oil was $70, by March it was closer to $30 a barrel. This price dropped when Saudi Arabia failed to convince Russia to back production cuts that had been agreed with other members of the Opec oil producers’ group.
The price of fuel can be divided into sections, these are made up of Government taxes, drilling costs, refining and transporting, and fuel companies profit margins.
The biggest proportion of the money we hand over for petrol is tax which goes to the government, they get around 65 per cent of the overall cost through fuel duty and value added tax (VAT).
Fuel duty is charged at 57.95p per litre, we also pay 20% VAT on top of that cost, so the amount of VAT you pay depends on how much fuel you purchase.
Businesses, including those within the motor trade sector can claim a portion of the VAT back has a company expense.
The price we pay for petrol and vehicle insurance policies vary according to the supplier you use and where you’re based in the UK.
Some supermarket retailers have recently cut petrol and diesel prices on their forecourts by as much as 12p per litre, in the current economic crisis, this will be welcomed by all drivers, including those of us driving new and used cars. According to the RAC, the average cost of petrol at the end of March was 113.54p.
The AA said the cheapest average unleaded petrol price at the end of March was 108.13p found in Northern Ireland, but in the south-east of England the average price was closer to 116.19p.
Competition has driven petrol prices down towards £1 as petrol prices are set according to nearby competition. If you only have one local garage with no close rivals, it will generally charge more per litre. According to the RAC, UK petrol prices have fallen by their largest margin in 12 years.
Looking for a motor trade insurance quote?
If you are looking for a quote on a motor trade insurance policy, you could save up to 67.5% with Unicom. Click here to get a quote that could save you £££’s
RAC fuel spokesman Simon Williams said: “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.”
As the coronavirus shutdown continues, concerns are growing for the independent fuel retailers as the price cuts hit profit margins.
The Petrol Retailers Association (PRA) has warned that many petrol stations will have to close in the coming weeks. “To help freight move and help key workers travel safely and independently through this period of crisis, petrol filling stations must remain open, but it is proving to be a challenge for many filling stations,” said Brian Madderson, chairman of the PRA.
“Without immediate cash flow assistance, many more forecourts across the UK will have to close,” he warned.