Drivers are set for some welcome relief at the pumps this week as fuel prices change. The average price of unleaded petrol has dropped to 151.98p a litre, while diesel has fallen to 168.64p a litre, according to the latest RAC Fuel Watch figures. However, the RAC believes retailers should now be cutting prices even further, arguing that motorists are still paying more than they should despite wholesale fuel costs tumbling.
RAC Calls for Faster and Greater Reductions
RAC head of policy Simon Williams said: "Fuel prices are falling steadily in reaction to the drop in the price of oil and wholesale petrol and diesel costs which is good news for drivers who've had a torrid time at the pumps this year. But our analysis of wholesale data shows the reduction should be faster and greater, particularly for diesel." He added: "The average price of petrol has come down 2p in the last week to 151.98p and diesel by 4p to 168.64p. Since unleaded hit an Iran war high of 159.53p on 28 May it's fallen by almost 8p whereas diesel is down 23p from its peak of 191.54p on 15 April."
Expected Further Falls
Mr Williams said drivers should soon be seeing average petrol prices below 150p a litre and diesel below 160p a litre if retailers fully pass on lower wholesale costs. He said: "Drivers really ought to see average prices of below 150p for unleaded and below 160p for diesel in the next week or so." Even after the recent falls, filling a typical 55-litre family car still costs £83.59 for petrol and £92.75 for diesel. That remains £10.50 more for petrol and £14.40 more for diesel than before the Iran conflict sent oil prices soaring at the end of February.
Oil Market Cooling
The renewed pressure for cheaper forecourt prices comes as the global oil market has cooled dramatically. Brent crude was trading at around $73 a barrel on Monday morning, a fraction of the levels reached during the height of the Middle East conflict after fears over supplies through the Strait of Hormuz eased. Oil prices have now retreated to around where they were before the latest surge in geopolitical tensions.
Watchdog Monitoring
The falling oil price has revived questions over how quickly fuel retailers pass on savings to motorists. Last week it emerged that the rapid decline in crude oil prices was not yet being fully reflected on Britain's forecourts, despite wholesale fuel costs falling sharply. The RAC said pump prices typically lag behind movements in oil markets, but argued retailers should now be reducing prices more quickly. The issue is also being closely watched by the UK's competition watchdog. Earlier this year the Competition and Markets Authority put fuel retailers on notice over potential profiteering during the oil price spike and has continued to monitor whether wholesale savings are being passed on fairly to drivers. The watchdog has warned it is looking for evidence of the so-called "rocket and feather" effect, where prices rise rapidly when oil becomes more expensive but fall much more slowly when costs come back down.
