Petrol drops to £1 per litre

11th December 2015

UK |  Fuel | Motorcycle | OPEC | Pump | Oil 

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Actually, the price has fallen below £1 per litre, and that's the lowest level since 2009. Currently, the ASDA supermarket chain (owned by the US giant Walmart) has ratcheted the price down to 99.7 pence per litre. According to an ASDA spokesperson, this is simply a "weekend promotional deal". Which might be true. But analysts reckon that the deal could well last a very long weekend, which might mean way into the new year.

Rival store Morrisons is close on ASDA's heels at 99.9 per per litre, but other supermarket petrol stations (i.e. Tesco and Sainsburys) are still a few pence above £1. However, on the supermarket battlefield, brutal campaigns are won and lost over a few pennies. And when it comes to fuel, it's well understood that some drivers will travel miles and pay pounds to save a few bob at the pump. Diesel prices have also fallen by around 1p per litre.

What's driving down prices is largely (but not entirely) the fall in the cost of Brent Crude oil. It's just dropped below $40 (roughly £26) per barrel, and it hasn't been there for around 7 years. Last summer, the price of oil had been as high (relatively speaking) as $110 (£72) per barrel.

In November 2015, OPEC oil producers pumped 32 million barrels per day from the ground and from beneath the oceans. That's the highest amount since 2008. According to some pundits, production should be cut to maintain prices and the all-important stability. But the OPEC oilheads disagree and are playing a worrying game with the markets, ever intent on bolstering revenues in a world of falling demand, particularly from emerging markets.

UK fuel prices are still 10 - 20 percent higher than some of mainland Euope (notably Spain). And while the average rider or driver will be pleased to get literally more bang for his buck, you might want to consider the fact that falling oil prices simply remind us that the economy is still is serious trouble and doesn't appear to have a viable exit strategy.
 

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