Sharp drop in fuel prices but experts call for further cuts

Petrol and diesel prices fell by some of the largest amounts in nearly 20 years last month as the price of oil slumped in February.

Forecourt costs were down 3p per litre for unleaded and 4ppl for diesel but industry observers say that there is still space for further savings to be passed on to drivers.

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Across the country unleaded fell to an average of 124.02ppl and diesel to 127.04pp. This means the cost of filling up a 55-litre family car with petrol is £1.61p less than it was in January at £68.21. For diesel it is £2.33 cheaper at £69.87.

The reduction in average costs was largely driven by the big four supermarkets, which embarked on two rounds of cuts in February.

Wholesale slump

Asda is leading the way among the big four supermarkets by selling petrol for 116.78p a litre – 3.5p lower than it was at the start of February and 3.5p cheaper than its closest competitor. It also reduced diesel by 5.9p to 118.8p which makes it 4p cheaper than its nearest rival.

The average price charged for unleaded between all supermarket sites is 119.19p and 121.62p for diesel – around 5p less than the UK average prices.

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The pump price reductions have been driven by a $10 slump in the price of a barrel of oil towards the end of February.

According to the RAC, February’s oil price reductions meant the wholesale price of unleaded dropped to below 90p a litre before delivery, retailer margin and VAT. The last time it was this low was at the end of January 2019 which led to an average UK pump price of around 119p – 5p less than the current average. The diesel wholesale price finished February at 92p a litre – its lowest since August 2017, which also translated to a forecourt price of around 119p a litre – 8p a litre lower than the current UK average.

Petrol still 6p too expensive

RAC fuel spokesman Simon Williams said: “February was a good month for drivers with two rounds of supermarket price cuts, both led by Asda, which put an end to two consecutive monthly rises. These resulted in 3p being shaved off the average price of petrol and 4p off diesel.

“While it is good drivers are benefitting from lower forecourt prices, in reality the wholesale price is such that the big four supermarkets, which dominate UK fuel retailing, should cut their prices again. At the moment both fuels are 6p a litre too expensive.

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“The oil price has slumped due to the spread of the coronavirus prompting fears of slower global demand. This may well lead to a move from oil producer group OPEC and its allies to restrict production when they stage an extraordinary meeting in Vienna on Friday. If they decide to take action to prop up the barrel price it would very likely put an end to falling forecourt fuel prices.”