Fuel drops by 2.5p a litre in March

Friday, April 7, 2017

 

March brought some good news for all drivers, as the price of fuel fell by its biggest margin in months.

 

Motorists saw the average price of unleaded fall to 117.54p per litre at the end of March – down from 120.15p – while diesel dropped from 122.19p per litre to 119.54p over the same period.

 

This means an average 55-litre family petrol car now costs £64.65 to fill up, with diesel slightly higher at £65.75. 

 

The price drops show that fuel retailers finally passed on reductions in the price of oil – which fell by round 5% - to customers on the forecourts.

 

RAC fuel spokesman Simon Williams said: “March brought some much-needed spring cheer to motorists with a significant 2.5p a litre reduction in the average price at the pumps.

 

“While prices were static in February, two months before that saw a 5p a litre added, completing a year of rising average pump prices. March saw the biggest fall in the price of diesel since January 2016 and since November last year for petrol.”

 

Supermarkets led the way, roundly making 2p-a-litre cuts as March continued – following calls from the RAC. By the end of the month, motorists could expect to have shaved as much as £1.40 from the cost of a full tank.

 

The biggest price drop was in Scotland – its average price fall of 2.9p a litre eclipsing the 2.6p UK average.

 

At the other end of the scale, equivalent prices of 118.38p and 120.30p made the South East home to the most expensive fuel.

 

RAC fuel spokesman Simon Williams says that, as longer days and warmer weather creeps in, the prospect of longer journeys means lower fuel prices are very welcome.

 

“But the big question is what will happen as we move towards the summer,” he says.

 

“Everything really hinges on the oil market and whether more is done to curb supply with view to getting the price to rise.

 

"The Organization of the Petroleum Exporting Countries (OPEC), together with some non-members, have cut production, but their efforts have been undermined by the US ramping up its fracking production.

 

“The low oil price that gave rise to fuel being sold for under £1 a litre in January 2016 was all driven by OPEC over-producing to lower the oil price and stop US fracking activity but every week now more fracking rigs are coming online.

 

"This is no doubt causing a major headache for OPEC. It must decide whether to cut production further and allow the US to gain more market share as the oil price rises or reconsider returning to over producing and lowering the oil price to make fracking less financially viable and keeping its market share, albeit at a reduced price.

 

“The strength of the pound against the dollar is also important as fuel, like oil, is traded in dollars, but having suffered a big drop in the value of the pound after the Brexit vote the new norm seems to be a pound that is consistently worth $1.24.

 

"The absence of any further significant downward movement should mean fuel prices will be mostly decided by the oil market.”

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