'Fuel could become cheaper than water'

'Fuel could become cheaper than water'

Falling oil prices could result in motorists paying less per litre for their fuel than they do for some bottled water, according to the RAC.

Some analysts have predicted oil price could drop as low as $10 per barrel this year. That, says the motoring organisation, could push down petrol prices to as little as 86p a litre if sterling does not weaken further against the US dollar.

The last six weeks have seen oil prices fall by 30% to just over $30 a barrel, but the RAC says it is concerned that many drivers are still missing out on lower prices at the pumps.

Simon Williams, the RAC's fuel spokesman, says: "With no apparent end in sight to the freefalling price of oil, motorists can expect some really low fuel prices in 2016.

"Breaking through the pound a litre price point for both petrol and diesel was clearly a welcome landmark, but it looks as though there is more to come. In fact we may get to a bizarre time when a litre of fuel is cheaper than a litre of some bottled waters.

"At the moment, however, we have a situation where retailers still need to pass on more wholesale price savings on diesel to motorists at the pump, as the wholesale price is still 3p a litre cheaper than that of petrol.

"We should really be seeing diesel priced several pence cheaper than petrol on every forecourt, to the point where the average price of diesel goes below that of petrol.

"In many areas of the UK the price of fuel is sadly far higher than it should be: we would urge every fuel retailer to price fuel on their forecourts so that it more fairly reflects wholesale prices.

"There is, however, a limit to how low prices can go as tax - fuel duty at 57.95p a litre and VAT on the total price, including fuel duty - make up the lion's share of the price of a litre. Even if the fuel was given away and the retailers didn't take a margin, the price of a litre would still be 70p."

Copyright Press Association 2016. Motoring News articles do not reflect the RAC's views unless clearly stated.