'Pass on oil cost savings to drivers'

'Pass on oil cost savings to drivers'

The RAC is calling on petrol companies to give drivers an early Christmas present at the pumps; passing on long overdue savings.

The call follows worldwide wholesale crude oil price cuts of over 40% from 115.36 dollars (£73.94) a barrel in June, to 68.59 dollars (£43.96) last weekend.

This amounts to over 7p per litre for petrol and almost 6p for diesel users, and would create the cheapest fuel prices for over four-and-a-half years.

If these suggestions were implemented, drivers would see average petrol prices fall from 120.84p to 114p per litre. They would also see diesel pump costs fall from 125.43p to 120p per litre.

Such prices have not been seen by motorists since March 2010, and compare with the 130.79p per litre for petrol and 138.24p for diesel seen at the beginning of 2014.

Simon Williams, fuel spokesman for the RAC, said: "The tumbling oil price, coupled with a pound that is still strong against the dollar, have led to a phenomenon that many motorists are pretty unfamiliar with - falling pump prices.

"The forecast reduction that retailers should be passing on is the biggest the RAC has seen in recent years, even since petrol began to come down from its record high of 142.48p a litre on April 17, 2012 (diesel 147.93p - April 13, 2012).

"Retailers now have a very reasonable record on transparent pricing so we have no reason to believe that they will not pass on the savings in the wholesale price.

"We just urge them to do it sooner rather than later to make the point very clearly to motorists that they operate a fair pricing system.

"If they do, we could well see petrol pump prices fall by well over 7p a litre in the next few weeks and diesel by almost 6p a litre."

Applying this kind of cut to typical average pump price, drivers could look forward to some exceptionally low petrol costs, he said. These could even plummet to below 110p per litre at the cheapest forecourts.

Mr Williams continued: "At a petrol price of 114p a litre, motorists would be saving over £9 (£71.93 down to £62.70) on filling up an average 55-litre family car compared to the beginning of the year; £10 for a diesel at 120p a litre (£76.03 down to £66).

"This will be very welcome news just in time for Christmas when household budgets are really stretched.

"It should also be another boost for business as it will lower operating costs substantially.

"While motorists are enjoying much lower forecourt prices, it's important to recognise that they will always be limited by fuel duty, which represents nearly 58p in every litre, and VAT which is charged on top, at around 20p a litre.

"A driver filling up a 55-litre petrol car at 114p a litre would therefore pay £62.70 of which £31.87p would be duty, £10.45 VAT and only £20.38 for the fuel itself."

Copyright Press Association 2014